The Madisonian. [volume], July 11, 1840, Image 1

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T HE 31 A IH S O N 1 A N
tiionam A l< L E HI ,
Ciillur a ml Proprietor.
DONA I. I> >1 A C l,K O l> ,
Associate I Alitor.
AGENTS.
Lewis II. DoBKDUWUt, 3-1 Catharine street, Phi
lailfltihia.
j K Wici.din, l'UUburg, Pa.
Mksuy H Mbe??, 1i>-I Bowery, New York.
J.,i on R How, Auburn, New York.
Svi.ViNU* StkVKSM, New I lawn, C'l.
E B FosTKH, Bostoni Mum
ThoMa* II NVii.kv, Cahawba, Alabama.
Wkst in F Bia< u, Fayette, Missouri.
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REMARKS OF MR. JOHN VV. ALLEN,
or onto,
ON THF. SUB-TKEASUHY BILL,
/)elirrre<l in tin- lloii.tr of Ki-presrntative*,
June 34, 184(1.
Mh. Chaihman :?Wit en I lir-t endeavored to
obtain the lloor several days ago, 1 intended to
speak at length 11 pon some topics that have since
been discussed with very great ability by gen
tlemen who were more fortunate than myself in
catching the riiairniuti's eye; and at this stage
of the debate, and of the session, it would be
an unjustifiable waste of time for me to travel
over ground so ably pre-oecupied by others. I
shall, therefore, sir. omit mentioning some mat
ters that had occurred to me, and shall be more
brief in my remarks upon some to which I pro
pose to allude than I otherwise should be.
It has been said that every gentleman here
iv,is elected with special reference to the vote
lie would give upon the bill under consideration,
and that he could not now vote otherwise than
was expected at the time of his election without
a violation of the understanding, express or im
plied, that existed between himself and his con
stituents. There may be some force in this re
mark, but it must be greatly qualified ; if we
come here with our minds fixed?our opinions
immoveable?our ears closed against all argu
1 l'"i hardly be entitled to the i ppella
Mon of a ilrltberalice assembly. Whatever
weight may be attached to the proposition by
some gentlemen?for myself I do not feel its
torce to any embarrassing extent?I was elected
an opponent of the administration and its
measures generally, but whether I should sup
port or oppose this or that particul ar measure,
neither my constituents, nor myself knew with
'Ortainty. They knew I was originally and
?trongly opposed to this bill, but since the time,
low almost two years, that judgment was pass
Ml itfkot* mv uud UJJUU lilrtt, uiuiiv HrllCCS
nay have taken place to induce a change in
ome individuals of the opinion then entertain
?d, both by its friends and its enemies.
1 have, therefore, been an attentive listener to
"w of the arguments that have been presented
l>y the advocates of this proposition, with an
anxious desire to ascertain its real merits, if I
had before misapprehended them, and to review
thoroughly the opinion heretofore entertained
ami expressed ; its friends urging its adoption
after repeated defeats, with a pertinacity show
ing their confidence in its expediency to be un
impaired. If fully satisfied that the welfare,
present and prospective, of the country demand
ed its adoption, I might be constrained, by a high
sense of patriotism and duty, to disregard the
entanglements of party alliance and all personal
considerations, and adopt a course of action
diametrically opposite to that I have heretofore
pursued.
I was opposed to the Sub-treasury plan when
presented at the extra session of Congress in
and have so continued to this time, and
'?r these reasons among others:?because, it
will expose the money of the Government to
new hazards of loss?because it will tend to
make two eurrencies, the better one for the C?o
vernmerit and the poorer one for the people?be
i.ni-e it will involve at the commencement, and
annually thereafter, a great expense, for which
?i'T" is not the slightest necessity?because, of
"ie enormous patronage it will put at the dispo
s.i h| the Executive?because, practically, it
u , P'"public money under his absolute con
trol, thereby contrary to all sound republican
: " trine, to the lessons taught us by history and
m utter contempt of the dictates of common
sense, uniting the purse and the sword in the
-un?. hands; and, finally, because it is one of a
series of experiments that has been i,i process
"I execution lor eight years back, and which has
proved little else than a series of disasters and
misfortunes to the country, alike destructive to
the morals, the prosperity, and the happiness of
<>lir people.
These were some of the objections I had
to the proposed measure, and after again hear
ing ami considering the arguments presented by
i s mends 1 am obliged t.. say, that my objections
instead of being obviated, have received addi
tional strength.
Tliy rpji'stions now m issue, I understand to
' ' r to Ihe mode Ol keeping the public funds
, " " 'I"''unes ol Collection and disburse
t/ii. I i'i ieurreney in which
"" ? vial! he received.
Awl Mnipi,. ;||1I| nohitfd ii, they appear at
r?i I U"'>' invr?lv?' eonside
. '!1(' highest importance to the safety
!" rl"'tu'ty of our institutions, and the wel
1 ln "f our peojde.
11 I had the ability to examine them all as
this late
| ' '"/hed'scu.Mon and of the session; and
'? ^f.wi very brielly, allude to but a
, , ?? "'.nnd to some of the reasons urged
? . , . "N ,l,'> Ml in Its behalf. We
H:ii,,? h'r. M[\t J r tf,'n,ll',nan fr01" New
"nitl ' (.oV' lll,aI th'' f,?ks
\H|,' 2 t;""1 ,h" p,,blic money.
\\ !? ? , | | "rM '.part ! and if a part which?
i! .I ' l,ow ' ,'h,'y ?lo it. and by whom
'in was the claim preferred ! This is
' 'hum l!!! " *Ct' '! ,(l llk.'' 0,l,' r matters of fact,
" IS tlie'i r 7/ l" 0 P"1' n ' ask
?ir ' I. W 7 l? ?how?, or let the
fi - " withdrawn. I do not believe it is well
a-l'ln,.. | , r,' 'a Par'i(,le of evidence can be
i u ,|\a[r;l|,"l,'IP1 1,11 ""'' fence, and my
I'm if,,,, , * 1 h would he reluctant to
, ,, "'J"-"jotiey at all; and they certainly
?v I, : ,. , ''" V w,'r'' 'o be villified as
.-.v, p". T lI,"v'' ypnr* past, by the party
liai i,. ... 11 ' :""1 ""'orreet as to the I. -t".
I : I,rf l,;rred a claim for which (her.
'" ?'?ion whatever. A clahn pres,,,,.
" '? <Ist,y' o/1I % Kr " fl,Vl',no ri^l.t
, the public funds, titan has a
'?it ili it ? It is not upon any ha,is of
" opponents of this measure would
^ ? uonev in them, nor on ncconnt of the
I,! ,;t i,s safety, and for the be
r~ iiipiiI ' i! avo''' 'lR' manifold
i lent to the contemplated system.
THE MADISON!AN.
VOL. Ill?NO. 115.] WASHINGTON CITY, SATURDAY, JULY 1 1, 1840. [WHOLE NO. 368.
We wert further told, by theraiuegrntlfmin,
that the public money should be in the hand* of
officers responsible to the people. Will this ob
jeet be accomplished by the adoption of the
Sub Treasury plan I IIow, 1 beg to know, are
these Sub Treasurers to be made responsible to
the people? The President is to appoint the
Receivers General and their subordinates; he
can make and unmake them at his pleasure. I
say the President appoints, for, although affir
mative action by the Senate is required, we
well know nominations to that body have very
rarely been rejected from the organization of the
Government down. General Jackson asserted
the doctrine, for the first time, that the Execu
tive was a unit, and that all the subordinate Ex
ecutive officers, were responsible, not to the peo
ple, but to him, the grand focus of responsibility ;
and that be, himself, was alone responsible
to the peonle. But, under the most orthodox
! doctrine of responsibility, the subordinate offi
cers of this Government, are reponsible to the
i people but very remotely and circuitously. The
I President holds his station for the term of four
years; he may, on the day of his inauguration,
appoint a very improper man to office, and the
people cannot reach him before the expiration of
the Presidential term, and then only through the
President, and by ousting him only, can they
oust the objectionable officer, nnd as a thousand
considerations are necessarily taken into view,
at a Presidential election, it seems to me obvi
ous that this idea of responsibility, for all prac
tical purposes, is entirely fallacious.
It is said that by depositing the Government
funds in banks, we imply a grant of political
power. How, sir, can political power in this
country be created or granted by implication,
and how can corporations having no souls and
nobodies that are tangible, receive or exercise po
litical power 7 Under our constitutions and laws
every citizen having certain prescribed qualifica
tions, possesses not implied but actual political
power, and so may the stockholders and officers of
banks, not by reason of their connection with
banks, hiAvever, but without any reference to
them. If it were said, that men with money
have more power, politically and otherwise, than
men without money, it would be unquestionably
true, because a rich man has more means for
conferring benefits, and for inflicting injuries,
than a poor one. But this power does not de
pend upon the nature of his investments?for
the man having money, will have the influence
pertaining to it, whether it be used for banking
purposes, or for manufacturing purposes, or be
lent to his neighbors.
It is urged that the Sub-treasury system should
be adopted to prevent the u-e of the public
money: and how long, let me n*k, has it been
the doctrine of the Administration party that the
people should bo deprived of the benefits result
ing Iroin the employment of their own money?
\\ hat said President Jackson in his celebrated
manifesto, after the removal in 1833, of the de
positee from the Bank of the United States to
the State banks ? It was, that
1 be funds of the Oovernment will not he annihi
lated by being transferred. 'l'hey will immediately !??
issued for the benefit of trade, ami if the Bank of the
United States curtail* it* loan*, the Slate banks,
strengthened by the public deposites, will extend
theirs."
But the extraordinary circular of Mr. Taney,
then Secretary of the 'l'reasury, is still more to
the point; it is conclusive. He said to these
banks?
a no ubjuu>iHc? of iiic jjtiouc money tcm tnaoic you
to afford INCREASED FACILITIES TO THE COMMERCIAL,
AND OTHER CLASSES Or THE COMMUNITY, AND TUB Db
PARTMCNT anticipates from you the adoption of such
a course respect ins; your accommodations, as will
prore accejttable to the people and safe to the (Sovern
ment
And what said the President two years after,
when the process had been going on for more
than three years by the State banks:
" I'o retain the public revenue in the Treasury, un
employed, in any way, is impracticable. It-is consi
dered against ihc genius ollr free institutions to
lock up in vaults the treasure of the nation. Such a
treasure would doubtless Ik- employed, at some time,
as it has been in other countries when opportunity I
teinptcd ambition."
Gen. Jackson says it is '' impracticable" to
prevent the use of the public money, and I ask
those gentlemen about me. who believe in the
infallibility of his judgment, why it is that we
should attempt to do thai which was pronounced
impracticable by such authority ?
II the money be used by a Sub-treasurer, it
will be for his own benefit, or that of his friends
?if by a bank, then for the benefit of the stock
holders on the one side, composed of rich men,
poor men, widows, children, charitable associa
tions and the like, and the profit derived is the
equivalent for the labor and responsibility of
managing the funds. But other than the inter
ests of the stockholders are to be looked to in
the investigation of this question. Our country
like all other new and sparsely settled countries,
is deficient in capital. We have fertile land in
abundanee? and the means of acquiring wealth
without stint; but we must have time to pro
duce such a result?such a supply of money,
that it may be cheap, as in Holland and England,
and on the Continent, results from the industry
and economy of ages. In the U. States money
has always commanded a high rate of interest,
because the supply fell short of the demand for
profitable investment. If the public money be
deposited in banks, the average amount consti
tutes the basis of discounts, for the benefit di
rectly or circuitously, of manufacturers, me
ehanics, merchants, planters, and everybody
who wishes to buy or sell labor, merchandise,
cotton, wheat, tobacco or any thing else, and
while the most beneficial effects thus flow
through a thousand channels, "the Republic
receives no detriment," so long as its drafts are
duly paid; and it we look at the Government
as distinguished from the people, odious though
the distinction be, we find that too, receives
great benefit from the increase of the means of
its citizens further to contribute to the public ne
cessities.
But without reference to the high authority
cited, let 1110 ask if Sub-treasurers will not u-e
the public funds; for Sub-treasurers we always
have had and must have for collecting and dis
bursing the revenues.
In December last, Mr. Woodbury made a re
port to the House of Representatives, (Doc.
N'o. 10.) which contains a table showing the
losses of the Government by disbursing officers,
and by collecting officers, in each case, from
17Sit to 1836 inclusive, which present the fol
lowing results:
I IHsliursing Queers.
Aggregate amount of loss in civil department,
$N98,0vJJ 5!)
Aggregate amount of loss in military and
naval, - - - 4,058,54!) <17
*i 57:j 5i;
Number of defaulters, civil department, '211
Number of defaulters, military and naval, -.2,51(1
Iaws per bead, civil department, 93,t!80
Iaiss |H'r head, military hiiiI naval, l,t!l3
$ 1, 795
*J Col I telinc (l/lirrr
Aggregate amount of loss bv collectors
of the customs, - . $1,1!W,!I7I> !>l
Aggregate amount of loss by collectors
ofintrrnal revenue and direct tax, I IJ,-2f>5 7tl
A u irrigate amount of bus by ree-iversof
sales of lands, - - - 397,304 II
82,038,549 81
Number ol'defaulter* ill the cuatom houac, H7
Number of defaulter* in the internal revenue, &c. 343
Number of defaulter* in the |ml>li<- land receipt*, i?7
357
LiOM |ier head among collector* of thccu*tom*, #13,781
Lot.* |>er hend among collector* of internal re
venue, Sic. - 1,1*30
Lo*s per head among receivers of public land*, 14,715
85,737
Making a total Ion* of seven millions of dollar* within
u fraction.
Anil it must be recollected that the above
does not include the losses that have occurred
or been discovered since Mr. Van Hureu came
into power, known to amount to about two and
a half millions, and how many millions may be
discovered under some searching operation, by
and by, no one can tell.
An important item to be taken into considera
tion, loo, is that the losses prior to 1837, oc
curred among agents presumed to have the pub
lic money in their possession but temporarily ;
whereas the projiositioii now is that the collect
lug agents shall continue to keep in their hands
the money till paid to disbursing agents, and the
danger must thereby be greatly increased. In
nddition to hazards of loss by fraud and vio
lence, a Sub-treasurer must be made of sterner
stuff than most men, if he can resist opportuni
ties that will always be urged upon men in pos
session of large sums of money, to advance his
own fortune,or to relieve the distresses of a friend
by the use, for a brief time, of a small part of the
money rusting in his vaults; fully confident of
his ability to replace it whenever it may be
wanted and this he probably will do for a sea
son. Hut repeated experiments successfully
practised, will beget confidence?the sums so
abstracted will become larger and the time
longer ; and, in the end, nine out of ten of your
agents will be found, in spile of all barriers you
may erect to prevent it, to have used your mo
ney, and nine out of ten of those who uo so .use
it, will prove defaulters.
A paternal Government, duly appreciating the
morals of its citizens, should be studiously care
ful to put no unnecessary stumbling blocks be
fore frail humanity, especially when elevated to
positions where pernicious examples may have
so much more influence than in the humble
walks of life. " Lead us not into temptation," is
one of the best injunctions of the best prayer
that falls from human lips.
It has been said in the progress of this debate,
that monev, in the hands of a Sub-treasurer will
not be so liable to embezzlement as in a bank,
because ?wer persons will have access to it.?
The idea thus indicated may be well founded as
ti proposition, but I am not satisfied it is well
applied. The bill provides for ten clerks for the
four Receivers General. Does any body sup
pose that a number like this will be found physi
cally competent to transact the business under
their charge? Bank notes, bank checks, trans
fers of credit, and every thing of the kind, are
to be superceded, and coin must be counted
twice at least, and this will be no light labor at
the important offices. How are the three, pos
sibly four clerks, assignable to the New York
office, to count one, two, and, perhaps, some
times live hundred thousand dollars in a day, in
coins from sixpences up toeagleSj in addition to
their other dutieg.L .^dv.iLiuiilire..hji jjotu; to
must be force enough at all times to do the
maximum labor of any day. Why, sir, it is ab
surd to suppose that ten clerks, or ten times ten
will be physically able to do the work at the four
great offices, if the collections are to be in spe
cie, and the friends of tlip bill know it.
But, in the smaller offices, it is not proposed
to have clerks; and is it expected, Mr- Chair
man, that a receiver at a land office is to mount
guard, every day, in proper person, over the
fifty or one hundred thousand dollars in his cus
tody ; or that he is to sleep every night under
his own roof; or that he is to be specially ex
empted from the attacks of disease or of death
itself, because he happens to hold a commission
from the Government to collect, and safely to
keep, its revenues'?
How is the comparative safety in other re
spects ? What is the sale and expedient prac
tice for individuals may be such for an aggre
gate of individuals as a political'community.?
What do you. Mr. Chairman^ with a consider
able sum of money, when paid you ? Do you,
sir, carry it about your person, or even lock it
up at home, exposed to the thief by day, the
robber by night, and to the flames that mav con
sume your house and its contents at any hour ?
or do you deposite it forthwith in the Bank of
Virginia ? I venture to say, sir, you do the last,
or I have much mistaken your character for pru
dence, good judgment. and common sense; all
so frequently exhibited, on this floor.
And how stands the question in other and
much higher respects, than as to the mere secu
rity of the public money?
In 1834, when a plan, substantially like this,
was introduced by Gen. Gordon, a Whig mem
ber of this House from the Ancient Dominion,
the Globe, then, as now, the organ of the Admi
nistration, declared it " revolutionary and dis
organizing, and subversive of the practice, of
the < iovernment, from '89 down." And again :
" It is no palpable as tha sun that the effect of the
scheme would be to bring the public treasury much
nearer the actual custody anil control of the President
than it is now, ami expose it to be plundered by a
hundred hands, where one cannot now reach it."
And as spoke the great Globe then, so spake
all the little Globes through the country.
What, too, said the venerable editor of the
Richmond Enquirer, always the supporter of
the ruling party, who opposed the plan in 1834,
when presented by a Whig, and in 1837, when
urged by Mr. Van Buren, but who has since
been induced by some magic influence to recon
sider his opinions, and now avers his determina
tion to sink or swim with the Administration and
its measures:
" We have objected to the Sub-treasury scheme, (so
called,) that, in the first place, it will enlarge the Ex
ecutive power, already too great for a Republic; 2dly,
that it contributes to endanger the security of the pub
lic funda; and 3dlv, that it is calculated to produce two
currencies?a baser one for the people, anil a better
one for the Government. The more we reflect upon
the matter, the more we read the speeches of the ora
tors on both sides, the more firmly are we satisfied of
the strength of these objections "
" It is certainly subject to very strong objections,
not the least of which is the very great increase of pa
tronage to which it must give rise, and a patronage of
the most dangerous influence, as being so immediately
connected with the public money."
And again :
" Rut I can see no advantage, and, on the contrary,
a fruitful sotircc of mischicf, in making Government
officer* the keepers of the cash Place about them
what guards you may, in the *h&|>c of commissioners,
insjicctors, or whatever else, peculation trill heenillete.
There in no iccurity in il, and it will invoNe heavy
and unnecessary expense. The chief and ovemiling
objection, however, is the endless source of patronage
to which it would give rise. Make the machinery as
simple as vou may, and open to \iew, wherever money
i? temptation will creep in, <mrf corruption in trery
form follow at it? heel*."
?' Truth without fear" is, I believe, the^ motto
flung to the winds at the head of the Enquirer.
If I am wrong, you, \lr. Chairman, can correct
me ; and when its editor felt the healthy invigo
rating influence of it. he boldly proclaimed that
the new device would prove the "fruitful source
of mischief"?that, place what guards you may,
" peculation would be endless"?that " there was
no security in it"?that " it would bean endless
xmree of patronage," and that " wherever mo
ney is temptation will creep in, and corruption
in every form follow at its heelit." Yet, with
that wouderful pliability that lit) ever enabled
Mr. Ritchie to adapt his course to the exigency
of the occasion, he now ardently supports the
plan he so warmly condemned, and is exerting
every faculty of body and mind to keen its au
thors iu power. Sir, if that wonderful character,
John Kandolph, of Roanoke, were here striding
across this Moor, with whip in hand and spur on
heel, as in days gone by, he would point to that as
additional evidence, if it were needed, to show
the truth of what he once said, that Mr. Hitchie
wa? a man of seven principles to wit, five loaves
and two fishes.
When individuals or communities are inclined
to change long and thoroughly established ha
bits, it is well to consult their own observation
and experience, and the lights of history too,
thut they may sec the dangers of the path they
propose to tread, if any there be, and perhaps be
induced thereby to avoid it altogether.
By a report of Mr. Secretary Woodbury made
to the House of Representatives Dec. 12, 1831,
it seems that, under the confederation, what
little money Congress had was deposited wher
ever the finance committee directed, depending
upon accidental circumstances. When the
Bank of North America, the first in the country,
was established by a few wealthy citizens of Phi
ladelphia, at a time when the public credit was at
its lowest ebb, and, through the instrumentality
of which, funds were provided to enable Con
gress to prosecute the war at the South with
vigor, gloriously terminating it by the capture of
Cornwallis at Yorktown, the public money was
deposited in it. Subsequently, as the three
banks of Massachusetts, New Vork, anil Mary
land, were successively established, they were
made depositories. In 1791 the first bank of the
United States was chartered, and in that were
the deposites made, by order of Gen. Hamilton,
Seen tary of the Treasury. We have heard
much lately, Mr. Chairman, in this debate of
Hamiltoman federalists, and this Gen. Hamilton,
1 understand, was the founder of the sect, and
his name is to live in that connection so long as
there are demagogues to prate about federalism
and monarchy as synonymous terms, and that
must be, 1 suppose, as long as the Government
stands.
Well, sir, it seems by a late discovery in the
other wing of this Capitol, that the world has
been entirely in error tor half a century in the
estimate it lias placed upon the mental capacity
of this Gen. Hamilton ; for it has been foolishly
believed that he was a man of transcendant
abilities, especially in matters of finance?at any
rate we know, sir, that he created our treasury
system out of chaos, and eave it form anil comli
uess, and breathed into it the breath of life, and
stamped the impress of his own geniun, what
ever it may have been, upon every feature so
effectually that it has never been effaced, and
hence, sir, in the apparent success and brilliancy
of his career it is not singular that men's minds
lost that balance so essential to preserve, in order
'to arrive at just conclusions. Hut now, Mr.
Chairman, late as it is, the verdict and judgment
of the world, unanimously rendered, and sanc
tioned by the lapse of fifty years, is to be " set
aside, reversed, and altogether held for nought,"
by virtue of a discovery t.f an honorable Senator
whose constituency ai. l mine are in part the
same, that Gen. Hamilton was at best but a
third rate man ; thus most conclusively showing
thefs sun rous oerus, anu mat M? r ? vacli
not so much mistaken as has sometimes um.
pretended, when he said that " error of opinion
inay be safely tolerated when reason is left free
to combat it."
But, sir, pardon this digression, and I will re
turn to my Historical reminiscences.
In 1809 was the first legislation on the subject
of the deposites of the public money?Congress
then requiring the disbursing officers of the Gov
ernment "tokeep" the money under their con
trol in some neighboring bank whenever prac
ticable. In 1811 the charter of the Hank of the
United States expired, and Mr. Gallatin, then
Secretary of the Treasury, selected State banks
as depositories, and so the law and usage re
mained till 1816, when the late bank was char
tered, and made, by the terms of its charier, the
depository of the public funds, though State
banks, in some portions of the country remote
from the branches of the United States Hank,
continued to be used. Of the banks so selected
between 1811 and 181t>, but continuing deposi
tories for some years thereafter, none failed till
1817, when there were seven, owingcollectively
$139,000, of which they soon paid all but f6,000.
During that most embarrassing period in our
financial and commercial relations from 1817 to
1821, four more failed, three of which paid in
full, and the amount due by the other was small.
The following extracts, 1 read from the report
I referred to, which indicates great research and
labor by Mr. Woodbury.
Extract from Mr. Woodbury's h'epnrt, December 10,
1834.
" Justice to the State banking institution*, ft* a
body whose conduct in particular eases has certainly
been'objectionable, but whose injuries to the Govern
ment have been almost incredibly exaggerated, and
whose ureal benefits to it, both during the existence
of our two national banks, and while neither of them
existed have been almost entirely overlooked, has led
me to make ibis scrutiny, and submit its results, under
a hope that il will, in some degree, not only vindicate
them from much unmerited censure, but justify this
Department for the confidence it formerly, and in the
ureal improvement of their condition and of the finan
cial affairs of the Government, has recently reused in
them. m I, ...
" Under these circumstances, so very favorable with
the new security and examinations provided lor, if
our former small losses by them, in keeping and pay
inc over the public revenue, under circumstances so
very adverse, arc compared with our large losses,
either in collecting or disbursing that revenue, their
present safety seems to be as great as is consistent with
the usual operations of the paiicr system, or with the
crdit which must always be entrusted by Govern
ment, in sonic way or other, to agents ot some kind,
in keeping the public money "
I'struct from Mr. Woodbury'* Special Iftjwrt, De
cember 13, 1831.
? It is gratifying to reflect, however, that the credit
given by the Government, whether to bank paper or
lank agents, has been accompanied bv SMALLH.R
losses, in the experience under the system of State
banks, in this country, at their worst periods and un
der their severest calamities, than any other kind of
credit the Government has ever given in relation to
il* pecuniary transactions." * ' * 1 hus the
truth on this inueb misunderstood anil misrepresented
subject appears to be, not onlv that one failure of a
selected bank did not occur within the period while no
United States Hank was in operation, but that ot
those which afterwards stopped payment within three
or four years, chiefly from the causes before mentioned,
and a part of which causes produced eight or tenfold
as many failures in England, under the full control
and influence of a national bank there as well as here,
four of the number have since discharged all their li
abilities, and the residue of the liabilities of all the
others as deposite banks, in the manner before estima
t?| is less than $35,000 This is not the tithe of the
sum which has frequently l>een lost to the I reasury
bv the failure of individual merchants to discharge
only their obligations for imports: not equal to the
sum frequently lost by the failure of many single dis
bursing agents connected with the diflcrent depart
ments of the Government, and under larger bonds for
security. Whether they [losses by State banks] arose
from an unsound policy pursued by the United States
Bank, or from circumstances which under the paper
system, neither legislation nor caution can always
avert, or from less justifiable reasons and in spite ot
all the salutary influence the National Bank could
exercise, it is a singular fact, in praise of this descrip
tion of public debtors?the selected banks that there
is not now due on deposite in the whole of them,
which have ever stopjK-ii payment from the establish
ment of the Constitution to the present moment, a
sum much beyond what 1<> now due to the United
States from one .mercantile firut tliat slop|?'d |iu\ men!
in 11+25 or 1 M-Jti, aii<I of whom ample security was re
quired, an.I supposed to !h> taken, under thr responsi
bility of an oatn If we include- the whole present
dues from tlie Government from discredited banks at
all times, ami of all kinds, whether an depositee or
not and embrace even counterfeit bill*, and every
other species of unavailable fundi* in the Treasury,
they will not exceed whut in ilue from two auch firms
Of almost one hundred banks, not depositories, whirh,
during all our want and commercial embarrassments,
have neretofore failed, in any part of the Union, in
debt to the Qovernment, on their bill* or otherwise, il
will 1m- seen by the above table (annexed to the report)
that the whole of them, except seventeen, have ml
justed every thing which they owed; and that the ha
lance due from them, without interest, is less thun
:$>??,000."
There is some obscurity about the results, a-,
exhibited by these extracts, but a reference to
the tables appended to the report, will show
losses of all kinds to have been #1,157,000. In
December last, Mr. Woodbury stated that of
that amount, about #300,000 bad been collected
since his former report, leaving about $900,0<>0
actually due from the State banks, with which
the Government bad had any business transac
tions whatever, whether by using them as de
positories or by the receipt of their notes, and
'embracing even counterfeit bills,"
True it is, that in December, 1838 and 13.10,
Mr. Woodbury asserts the losses to have been
six and a half millions, adding to his former cal
culation, five and a half millions for loss sus
tained by the receipt of the depreciated notes of
the banks, during the war. 1 a?k, sir, if it is
not strange that an item so important as this,
being five times as great as all the losses re
ported in 1834, should have been so overlooked
liv Mr. W., in making a special report of nearly
lifty closely printed pages, in which he under
takes to "give information to the Legislature re
specting all matters which shall pertain to his
office" in relation to the advantages of the State
bank de|>osite system, as contrasted with any
and every other.
This most important item, to which lie before
made no allusion, be tells us does not appear on
the Treasury books, or any where else, and
therefore he jumps to his conclusion, and which
might, upon his own showing, have been any
thing or nothing, much or little, as suited the
occasion. Hence in '34, this newly yamped-up
loss-had no existence; in December, '38 and '30,
it was five and a half millions, and when we
come back here next December, we may find it
down to cypher or up to fifteen millions, varying
as the interests of the party may require vastly
more than the length of an English Chancellor's
foot.
If a loss had actually occurred that was inany
way tangible, I ask ii' it must not necessarily
have been shown on the books of the Depart
ment ; for how otherwise could its accounts be
balanced. I understand the pretence for setting
up this claim, is based upon the fact, that the
Treasury notes during the war, were sold lor
bank bills which were at a discount for specie,
the banks south of New England having sus
pended, and the difference between specie and
the bank bills is charged as the loss. But, Mr.
Chairman, what was the relative value of Trea
sury notes and bank notes during the war? The
last were from five to ten per cent, discount for
specie, and the former at from ten to twenty
eight per cent., thus making the difference be
tween Treasury credit and bank credit, greater
. ~C }
with greater certainty and less delay, than those
of the Government. At. what time the credit of
the Government was at its lowest ebb, I do
not know, nor is it material ; but my impres
sion is, that it was soon after that most distres
sing and afflicting period of the war in August,
1811, when our coasts were lined with Bri
tish ships filled with the victors of Napoleon,
annihilating our commerce, destroying our towns,
and disgraceing themselves and us, by reducing
this magnificent edifice, and the other public
buildings here, used for civil purposes merely, to
ruins. Then it was, our Government appealed
to the banks to furnish the means, as they had
already partially done, to enable the Government
to protect the country ; and their "patriotic ef
forts," as Mr. Woodbury styles them, were put
forth to their great loss and embarrassment, as
most clearly evinced on the attempt subsequently
to resume specie payments. During the war,
specie was an article of merchandise exclusively;
all the business of the country had reference to,
and was transacted upon the paper currency, and
the paper received by the Government, except
ing to a limited extent, was paid away at its no
minal rate.
I reject, therefore, sir, this claim of five and a
half millions, not thought of in 1834, and now
first presented by a Secretary of the Treasury,
only because it might help to bolster up this new
project, thrice rejected by the representatives of
the people; and 1 hold Mr. Woodbury to the
account as stated in '34, making a balance then
of about #1,100,000, from which is to be de
ducted about $300,00(1 paid between 1834 and
1S37, showing an actual loss to the Government,
from its foundation down, of $900,000 in round
numbers.
The loss by collecting and disbursing officers
between 1789 nnd 1837. 1 have before shown,
was seven millions, making a difference of six
millions against the limit ted Sub-treasury plan |
as it had been in practice when one class of offi
cers were presumed to deposite the money in
bank as soon as collected, and the other was
presumed not to receive it till wanted for dis
bursement. In near fifty years the Government
lost by these agents about eight times as much
as by the State banks; but let it be remembered
that we had a National Bank during forty years,
by which, beside the fifteen hundred thousand
dollars paid by it as a bonus for it? charter, and
the benefit accruing to the Government by hav
ing its funds transferred gratuitously to all parts
of the Union, its pensioners paid, without cost,
and many other highly valuable services, all not
only without loss, but the Government, as a n
tiriiig partner from the concern, sold out its
stock at a premium of $1,100,000.
If the account be stated with the local bank
alone, there,was a loss of $900,000?if with the
United States Bank alone, there was a profit of
$1,100,000?and, if with the United States Hank
and the local banks together, there was a profit
of $200,000, against losses by defaulting indivi
dual agents of seven millions. But, unfortu
nately, the defalcations did not end on the 1th
March, 1837, but have occurred since to an ex
tent ten times greater than before.
You, sir, was not a member of this Mouse at
the extra session in September, 1837, but some
of these gentlemen who were, must well recol
lect the triumphant announcement by the then
Chairman of the Committee on Ways and
Means, (Mr. Cambreleng,)at a midnight sitting,
that " the Sub-treasury system was in full ope
ration, and would be, through 1838-39-40 and
41, in spite of lamentations here or elsewhere !"
we, fresh from the people, having ju?t deter .
mined that no warrant for it should be found on
the statute book.
And it has been in operation, aiding nothing
and blasting every thing, and Sub-treasurer- '
have absconded with twenty-five hundred thou
sand dollars, if not more, of our money, since j
the celebrated decree of Mr. Cambrcleng, who, ?
having been rejected by the people, is reaping !
the rewards of his fidelity as minister to one of
the first courts of Europe.
These several matters 1 commend, sir, to the 1
consideration of sundry gentlemen who I have
in my eye, and who are prone to condemn the
hanks and praise the Sub-treasury; while I refer, j
I for a few moments, to the late deposite banks. |
! have nothing to say about their being se
duced to the embraces of this Government by
its promises of ?'|>lr*ii(liil profit*?nor of the me
rit-i of the system established by the deposite
law?nor of the capacity of State hauks tocarty
on the fiscal operations of the (iov? rtiment. I
speak only of the manner in which they per
formed their obligations to the Government,
prior, ami subsequent to, the .suspension in MaVt
1^'7 ; but, Mr. Chairman, the opinions ol men
in high places, and who were bound, officially,
to know all about the business, must be far bet
ter than mine, and I therefore call the attention
of the Committee to the following item, which
I read from the Message of Gen. Jackson, in
I )ecember, 1834.
" Happily it if already illustrated that the agency of
such an institution (as the Hank of the I!ruled Slates)
in not necessary to the fiscal ojieration* of the Go
veminent The State hanks are found fully adequate
to the [lerfurmunce of all services which were required
of the Hank of the United Slates, quite as promptly
and witli the same cheapness. They have maintained
themselves and disch irged all these duties while the
Hank of the United States was still powerful and in
the field as an open enemy ; and it is not possible to
conceive lhal they will find greater difficulties in their
o|NTations when that enemy shall cease to cxibI
And from the annual message of 1835:
" The experii nee of another year has confirmed the
utter fallacy of the idea that the Hank of the United
States was necessary as a fiscal agent of the Govern
ment. Without its aid, ax such, indeed in despite of
all the embarrassment* it was in its power to create,
the revenue has been paid with punctuality by our
eiti/.ens; the business of exchange, both foreign and
domestic, has lieen conducted with convenience; and
the circulating medium has l>een greatly improved,
lis the use ot" the Slate banks, which do not derive
their charters from the Gener-I Government, and are
not controlled by its authority, it is ascertained that
the moneys of the United States can lie collected ami
disbursed without loss or inconvenience, anil that all
the wants of the community, 111 relation to exchange
and currency, arc supplied as well as they ever have
been If, under circumstances the most unfavorable
to the money market, it has been found that the con
siderations on which the Hank of the United States
resteil its claims to the public favor were imaginary and
groundless, it cannot be doubted that the experience of
the future will be more decisive against them. '
And Mr. Secretary Woodbury, in his report
of the same year, says :
" This (the Treasury) Department takes great plca
sute in stating that the public money continues to be
collected and deposited under the present system of
selected banks, with great ease and economy in all
cases, and with greater in some, tlu.n at any former
period The transfers of it to every quarter of the
country where it is needed for disbursements have ne
ver been effected with more promptitude, and have
been made entirely free of expense to the Treasury.
" The payments to creditors, officers, and pension
ers have been punctual and convenient, and the whole
fischl operations through the State banks have as vet
proved highly s itisfactory. Incidental to this, the fa
cilities that have been furnished to the commercial
community in domestic exchanges were probably ne
ver greater or at so moderate rates."
But the shouts of triumph were made to rinr
yet louder in the annual message of General
Jackson, in December, 1836:
" Experience continues to realize the expectation*
entertained as to the capacity of the State banks to
jierform the duties of fiscal agents for the Government
at the time of the removal of the de|K>siteH. It was
alleged by the advocates of the Bank of the United
Stutes that the State banks whatever might be the
regulations ot' the Treasury Department, could not
make the transfers required by the Government, or
negotiate the domestic exchanges of the country. It
is now well ascertained that the real domestic ex
changes 1 icrformed through discounts by the United
States Bank and its twenty-five branches were at least
one-third less than those of thedeposite banks for an
equal period of time ; and if a comparison be insti
tuted between the amounts of service rendered by
these institutions, on the broader basis which has been
used by the advocates of the United States Bank in
estimating what they consider the domestic exchanges
lrT.M r^M^ as'm duty boundTswcUs
the chorus:
" II is a source of high gratification to be able to add
thnt. while so selected and en.ployod, not a single dol
lar was lost In the Government by any of them, or a
single failure occurred to transfer promptly and par
out satisfactorily the public money entrusted to their
custody ; nor is it believed that the domestic exchanges
of the country were ever lower or more regular than
during that |>eriod ; and the large amount of them
j*'rformed by these deposite banks in ordinary pur
chases or discounts, equalling from one hundred and
forty to two hundred millions of dollars yearly, or near
a third more than those ol the same kind by the Uni
ted States Bank while the fiscal agent of the Govern
ment, evinced the great ability and usefulness of the
banks on this important subject."
We all recollect I hat Gencrnl Jackson, when
leaving the chair of Slate .on the 4th of March,
1S37, delivered what he was pleased lo call a
Farewell Address to his fellow-citizens in imi
tation of the example set by the revered Father
of his Country ; whether impiously or not, every
individual will determine for himself. For my
own part, sir, 1 hope no future President will
renew the experiment, and from the ill success
attending this, 1 think no one will, if he has any
regard for himself or respect for the opinions of
the people. I want my children, Mr. Chairman,
to draw lesions of piety and patriotism and wis
dom from t/if Farewell Address, and not from a
Farewell Address that mn\ he issued by n par
tisan President having claims upon his party
only, and not upon his country.
Out sir, in this address he.says:
" At the moment when I surrender my last public
trust. I leave this groat people prosperous and happy."
Gen. Jackson for once was deceived?'twas
the calm that precedes the hurricane that mis
led the " Hero of New Orleans" when thus
looking upon the clear, blue sky?the experiment
was strained to its utmost capacity of tension.
Mr. N an Burcn took the seals of office, and in
two short months was compelled to call an extra
session of Congress to provide the ways and
means to keep the machinery of Government in
motion ; the deposite, and all other banks, having
exploded, Itoni one end of the Cnion to the
other, with forty millions of the public money,
nominally in their vaults, but really scattered to
the lour winds of Heaven, under the direction
of Mr. Secretary Taney, Mr. Secretary Wood
bury. ami the President himself.
f ro nr. continced.]
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