The pilot. [volume], April 16, 1840, Image 1

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THE PILOT,
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RICHARD J. MATCHETT. PRINTER.
tetrad from the speech of Dr. FRJJVGIS P
PHELPS, of Dorchester County, delivered
in committee of the whole, in the House of
Delegates of Maryland, January 14 tli and
Js</i, 1840, on Mr. Graves's Resolutions on
the Currency, and to instruct the Senators
and Representatives from Maryland in Con
gress, to vote for the Sub-treasury Bill.
Mr. PHEI.PS said, having disposed of the ar
gument upon the right of instruction, he would
then proceed to consider the resolutions, in the
order in which they had been submitted; and
first we are requested to declare by our votes
that we regard " gold and silver the only con
stitutional currency." However specious or
plausible this proposition may, at first view,
appear, lor one, Island prepared, to deny the
position. Let us for one moment refer to the
law and the testament upon this subject, let us
examine the constitution itself, and see what that
instrument says upon the subject of currency.
Not one word, to the best of my recollection.—
In section eight, article the filth," it provides
that "the United States shall coin money,
shall regulate the value thereof, and regulate
the value of foreign coin;" hut with regard to
currency, there is no provision. Mr. P. said,
now, sir, let us consider whether the framers
of that immortal document intended to prohibit
the circulation of all other currency, save the
precious metals. In order properly to under
stand this subject, we must refer to the period,
to the time, and circumstances which were
prevalent when this instrument was first spo
ken into existence; and the first fact which eli
cits our attention is the circumstances of bank
paper being used as a currency anterior to,
and ever since the adoption of the constitu
tion of the United Stales. The Secretary of
the Treasury, so early as seventeen hundred
and ninety-one, two years after the formation
of the government, issued his treasury order
making bank notes receivable lor government
dues; and, said Mr. P., one year alter that or
der issued, it was sanctioned by a law of Con
gress. From that tune until the present, in
war and in peace, in prosperity and in ad
versity, under all parlies, under every admin
istration, has <bank paper been received and
circulated by the government and by the peo
ple as currency. The very nature, the very
genius of our government would justify , would
sanction, would approve this fact. Sir, not
only is bank paper currency, but bills of ex
change, drafts, promissory notes, and every
other evidence of indebtedness can but be re
garded as currency, Gold and silver, we are
free to admit, is the only basis of currency, and
the only legal tender; and all the evidences of
indebtedness before spoken of are as much re.
deetnable in gold and silver, as is bank paper-
Tliis hard money doctrine is a doctrine that
has been spoken into life iu the evening; yes, in
the evening of our short day; a doctrine "con
ceived in sin and brought forth in iniquity;" a
doctrine which you, and your party have pro
mulged; a doctrine which, if carried into el
fect'would sap the foundation of the very gov
ernment under which we live; would turn into
sorrow and sadness that joy and gladness
which beams in the eye of every poor man in
the land, who is possessed of honesty, industry
and generous enterprize. Again, what pro
portion of gold and silver is there to that of
other currency according to the true intent
and meaning of the term, as I have defined it?
Some writers, said Mr. P., upon political econ
omy, say the proportion of the precious me
tals to that of curreney, is not more than one
dollar to every twenty in circulation. Others
say one to ten. Admit the minimum as being
true then, if you carry into effect the spirit
and genius of the resolution under consid
eration, what change would it work upon
all the laws of trade and enterprise? What
change would it effect between the rela
tion of debtor and creditor? How would
it paralyze the energies of every poor man it)
vour country? What blight, and mildew would
be stamped upon the trade and commerce of
your nation? From the contemplation of such
a picture, the heart sickens, and turns away iu
loathsome disgust; yet, sir, this hard money
doctrine, this gold and silver, the only constitu
tional currency, if carried out, must jwoduce
in real life, a picture of which 1 have only given
the light and the shadow. [The hour of three
o'clock having arrived, Mr. Phelps here gave
way to a motion to adjourn.]
On Wednesday, Mr. P. resumed his re
marks, and briefly recapitulated the positions
which he entertained on yesterday. He '.lien
passed on to the next resolution in order,
which declares the" "pestilent effect of paper
money on .the necessary confidence between
man and man, necessary confidence in the
public councils, on the industry and morals oi
THE PILOT.
the people, and on the character of our repub
lican government" is, and ever has been felt
and acknowledged from the formation of the
government. Now, sir, the general interpreta
tion of this resolution must be so construed and
can in no other light than as a direct attack
upon all banks and every other species of cre
dit; and can only be inconsistent with the idea
of a hard money currency. Now, said Mr. P.,
I told you yesterday, that the doctrine of your
party was the doctrine of hard money, and
hard money alone; and I now challenge you to
meet this question boldly and with calm deter
mination Never attempt to change the ques
tion. flun up your flags to the mast head, stud
show to the world your true position. The
state hanks have doubtless forfeited their char
ters, you now have the neck of theso monsters
fairly under your leet. and 1 challenge you
now, sir, to crush them. Down with the banks;
down with them at once, and let your boasted
experiment go into effect. For one, I, am wil
ling to suffer, that the body politic may be
purged of all its impurity, if you can make it
appear that corruption exists. I declared said
Mr. P., upon this floor, on a former occasion,
that the present, disorder in our monetary con
cerns had been brought upon us by the last
and present administration of the general gov
ernment. That position I now reiterate. 1
stated also that, previous to General Jackson' 6
attempt to give us a better currency, we had
the best currency known to the civiiized world
a mixed currency of bank paper, based upon
gold and silver. The paper of every bank,
with scarcely an exception, was convertible
into gold or silver at the pleasure of the holder;
the exchanges of the country were at the mini
mum rate; the government collected and dis
bursed its funds, free from expense or loss, in
every section ol this wide spread country. In
support of this position, Mr. P., read from the
report of General S. Smith, of the United
States' Senate, a warm friend of the adminis
tration, the following extract:
"The currency ol the United States, the on
lyllegal currency, is gold and silver; all debts
to the government, and all debts to individuals,
being received in that medium, and in no oth
er. As however, the amount of coin requisite
for those purposes would be unnianageaUe and
inconvenient, the United Slates, like other
commercial countrires, have adopted the sys
tem of making credit supply many of the cases
of coin; and numerous banking companies have
been established, issuing notes, promising to
pay on demand, gold and silver The Govern
ment of the United Slates has established one
of a similar character; and for the convenience
of the community, the public revenue is col
lected in gold and silver, the notes of the Bank
of the United States, and the notes of such sol
vent State banks as the Bank of the United
States and its brandies will receive as cash.
"The currency, therefore, of the United
States, in its relation to the Government of the
United States, consists of gold and silver, and
of notes equivalent to gold and silver. And
the inquiry which naturally presents itseli; is,
whether this mixed mass of currency is sound
and uniform for all the practical purposes of the
Government, and the trade of the Union.—
That it is so, will appear from the following
facts :
Ist. The Government receives its revenue
from 343 Custom Houses, 42 Land Offices,
8,004 Post Offices, 134 Receivers of Internal
Reverine, 37 Marshals, 4 and 33 Clerks of
Courts.
"These, with other receiving officers, which
need not be specified, compose an aggregate
of more than 9,000 persons, dispersed through
the whole of the Union, who collect the pub
lic revenue. From these persons the Govern
ment has, lor ihe ten years preceding the Ist
of January, 1830, received, 8230,068,855 17
This sum has been collected in every section
of this widely extended country, it has been
disbursed at other points, many thousands
miles distant from the places where it was col
lected, and j'et has been so collected and J is-;
tributed without losing, as far as the commit
tee can learn, a single dollar, and without the
expense of a single dollar to the Government.
That a currency, by which the Government
has thus enabled to collect and transfer such
an amount of revenue to pay its army and
navy, and all its expenses, and the national
debt, is unsafe and unsound, cannot readily be
believed fir there can be no surer test ol'its suf
ficiency, than the simple fact that every dollar
received iu the remotest parts of the interior,
is, without charge, converted into a silver dol
lar, at every one of the vast number of places
where llie service of the Government requires
its disbursement. The Secretary of the Trea
sury, in his report of the 6lh December, 1828,
declares that, during the (bur years preceding
the receipts of the Government had amount
ed to more than ninety-seven millions of dol
lars, and that "all payments on account of the
public debr, whether lor interest or principal;
all on account of pensions; all of the civil list:
for the army; for the navy; or for whatever
purpose wanted, in any pariof the Union,have
been punctually met,' The same officer states,
that 'it is the preservation'of a good currency
that can alone impart stability to property, and
prevent those fluctuations in its value, hurtful
alike to individuals, and to national wealth, —
This advantage, the Bank has secured to the \
community, by confining within prudent limits
its issues of paper, &c. &c.
"2d. If this currency is thus sound and
uniform for the Government, it is not less so to
the community.
•'The basis of all good currency should be
the precious metals, gold and silver; and in a
"power is always stealing from the many to the few."
BALTIMORE, THURSDAY, APRIL 16, 1840
I mixed currency of paper circulating with gold
J or silver and convertsble'into it, the great object
| to be attained is, that the paper should always
! he equal to gold or silver, that is, it should al
ways he exchangeable for gold or silver. Such
a currency is perfect, uniting the convenience
of a portable material with the safety ofa nieta
j lie medium. Now it cannot be doubted, that
throughout this whole country, the circulating
bank notes are equal to specie, and convertable
into specie. * *
* Accordingly, the fact is, that the ge
neral credit of the banks is good, and that
their paper is always convertible into gold and
s lver, and for all local purposes for a local
currency equivalent to gold and silver. There
is however, superadded to this currency a gen
eral currency more known, more trusted, and
| more valuable than the local currency, which
J is employed in the exchanges between differ
ent. parts ofthe country. These are the notes
of the national hank. These notes are receiv-
I able for the Government, by the 9,000 receiv
| ers, scattered throughout every part of the
country. They are in fact, in the course of
I business, paid in gold or silver, though they
, arc not legally, or necessarily so paid, by the
t branches of the banks in every section of the
Union, in all commercial places they are re
ceived, in all transactions, without any reduc
tion in the value, and never under any circum
stances, does the paper, from the remotest
branches, vary beyond a quarter of one per
cent, in its actual exchange for silver. Here
theji, is a currency as safe as silver; more con
venient, and more valuable shan silver, which,
j through the whole Western and Southern, and
! interior parts of the Union, is eageriy sought
tin exchange for silver, which in those sections
often bears a premium paid in silver, which is
| throughout the Union equal to silver.
Now, sir, I want no more conclusive testi
! niony in support of the premises laid down
than the very able and conclusive document
j just read. It establishes, beyond a doubt, all
that we contend for; and it only remains for us
to point out the present ruinous and disastrous
condition ofthe currency of this country, and
compare that condition with.the state of things
that prevailed at the time Gen. Jackson ascen
• ded the chair of the State, to convince the
! candid of all parties that "there is something
j rotten in the State of Denmark." That this
I better currency, so far from proving a panacea
I for all the disorders and derangements in the
: commercial, agricultural and manufacturing
j concerns of the nation, has spread confusion
'and dismay through every branch of industry,
I apd paralyzed every thing like enterprise.—
I The late administration, Mr. Chairman, com
l tnenced its war upon the currency by first at
tacking the Bank of the United States. I need
not recapitulate to you, sir, the commencement
and end of that campaign. This has become
a matter of history; and it is needless for nte
to detain the committee by giving a prolix ac
count of this most disastrous transaction. The
constitutionality of that bank has this day
been questioned, and dwelt upon at great
length by the gentleman front Baltimore City,
Mr? LeGrand. We have been gravely told
that the power to create such an institution no
where exists in the Constitution ofthe United
States; that the banks that have existed should
never have been chartered: that it was a gross
usurpation ofpower on the part of Congress
to have created them. Now, sir, said Mr. P.,
I disclaim all ability to discuss grave constitu
tional questions. I profess not to attempt a
critical analysis of the provisions ofthe consti
tution upon this subject; but from the high
Sanction which has been given to the constitu
tionality of a bank ofthe United Slates, I can
not for one moment doubt that such a power
does exist within the strict perview ofthe con
stitution. Need I tell you that this power was
acknowledged and acted upon by the very tra
iners ofthe constitution themselves —by those
patriots and statesmen of '7o—by Washing
ton. Hamilton, Jefferson and the elder Adams.
| and Madison. It is true that this power
was at one time doubted by Mr. Madison;
hut he lived long enough to see and retract his
error Again, sir, this power was acknowledged
by Monroe and the younger Adams; and even
G.'n. Jackson hitnseifrio where declares, in ex
press terms, 1 fiat the Bank ofthe United States
it unconstitutional. Need I, Mr. Chairman,
I adduce other testimony in support of the doc
trine which I here advocate? Is it necessary
sir, to refer you to the decisions ofthe supreme
judiciary of the counfy, to tell you that Xhe
constitutionality ol the United States' Bank was
tested and determined by Chief Justice Mar
shall and his associates, and that this doctrine
has been sustained by the decision of every
State Judiciary in this Union ? Whilst 1 am
supported and sustained in the opinions which
I have here advanced, by such high and accu
mulated authority as above referred to, I feel
that my feet are placed upon a rock; and al
though the turbid waters of parly strife and
party rancor may dash their spray around nte
I feel regardless of their fury and their power.
Truth, sir, is immutable and will ever defy all
opposition. The elements themselves may
conspire, but site proudly stands secure in her
own conscious rectitude. The bank, in spite
of all these authorities, Mr. Chairman, was 1
scarcely need tell you, conquered by the con
queror of Packenhatn. She fell, sir, by the
hands of party strife and party rancor. What
was the next grand rnaneevre towards furuish
ing a better currency? It was to remove the
funds of government, Bnd place them in the
vaults of State Banks, (commonly known by
the cognomen of Pet Banks,) and this was
pone contrary to the express will of Congress
who had, but a short time previously, declared
by almost an unanimous vote, that the govern
ment funds were perfectly safe in the vaults of
the Bank of the United States. After these
funds were safely placed within the keeping of
the pet banks, the next step was to issue a
treasury circular, advising these banks to loan
out their funds freely—to discount for the mer
chants liberally—in fact, to supply the country
with that deficiency of currency which other
wise would have grown out of the veto of the
United States Bank charter. 1 need not, said
Mr. P., read you this circular, which now 1
hold in my hand, to prove this position, as it
would be a useless consumption of time. What
is now the aspect of the affairs of our monetary
concerns? Why, sir, bright and glowing (as
the party there in power would have us be
lieve) as the ra vs of the May day sun! The
broad ocean ofthe commercial world was calm
as a sea of glass! Not a cloud, or even a rip
ple, to portend the coming storm! Mr. Tane.v,
the Secretary of the Treasury, in his report to
Congress, congratulates the country upon the
ushering in of Ins golden dream of a better
currency. He assured the nation that these
deposite banks were performing all the duties
assigned them as well, yea, even better, than
did the Bank of the United States; that ex
changes were equal throughout the whole
country; and, in short, that the experiment had
already realized to the country all, and even
more, than the friends of this system had ever
predicted.
About this period, said Mr. P., a new idea
seemed to have, for the first time, flitted across
the brain of the old Hero and his coadjutors.—
The gold and silver age was about ushering
in; Europe was about to be drained of all her
precious metals, to give to this country a better
currency; and here, sir, said Mr. P., permit me
to remark that the solvency of our currency
does not always, nor indeed mainly, depend
upon the quantity of specie on hand. In sup
port of this position, I will refer you to a Tew
facts; and first, previous to the war which has
ol'late been so furiously timed upon the banks
of the country, we had in this country, accord
ing to official accounts now before me, but for
ty millions in specie; and according to the offi
cial document of the Chief Magistrate of this
nation, transmitted to Congress at ihe present
session, we now have eighty-five millions; and
yet strange to tell, when we had but forty mil
lions, as 1 have before shown, we had the best
currency in the world; and now, with double
that amount, specie is entirely banished from
circulation. Aga n, in 1797, the Bank of Eng
land failed to redeem her notes in specie, and
four months after, the fiscal concerns of that
bank were investigated, when it fully appeared
that she had in vault four millions pound ster
ling for every eleven millions in circulation,
which was a much larger proportion of specie
than she usually had. previous to the suspen
sion. The Bank of France suspended in 1806
when her specie capital was the enormous a -
mount ofsix hundred millions ofdollars.
But, to return. At the time the deposit bank
system was adopted by the government, all
tiie State banks became "the objects of executive
care. I have shown you already, that Presi
dent Jackson by his official circular to the de
posite banks, had occasioned the greatest pos
sible expansion of the currency, for the accom
modation of the merchants and other portions
of the community; and at this very crisis he
was seized with the gold and silver mania.—
He, sir, was about ushering in that glorious era
in the history of 1 his Republic, when the broad
waters of the Mississippi were to bear upon
their bosom the accumulated gold and silver of
every clime. The mines of Spain—ol South
America—of Africa, and every other country
were to be exhausted for the special benefit of
the favored sons of this most favored nation.—
Whilst this most brilliant dream was lighting
I up the fancy of the Hero and the great finan
cer of the nineteenth century, lie issues, as a
means of effectuating his favorite project, his
famous specie circular, demanding in payment
for the government lands nothing but the pre
cious metals. Now, sir, 1 need not tell you
and learned gentlemen upon this floor the dis
astrous effects upon the banks and.the currency
which such an order was sure to produce. The
modus operandi of such a measure, must at the
time, have been obvious to even a tyro iu the
science of finances. The Banks at such a time
and under such circumstances, could not long
sustain the shock. Their resources were crip
pled; their capital exhausted; their gold and
silver was to he seen moving from the borders
of the Atlantic, from our maritime cities, from
the great marts of commercial enterprise, to the
wilds of the far west. Even, sir, the granite
hills ofthe Allegany were made to groan be
neath the weight ol the precious metals in con
stant transitu to the borders of our western ter
ritories. The effect of the repeated experi
ments upon the currency were now beginning
to be felt and deeply deplored by all classes ol
the community. The banks, ever anxions to
sustain their credit, and to redeem their liabili
ties, were forced to curtail their discounts.
They could not longer afford their usual facili
ties to commerce. Their creditors were called
upon for payment at the very time they were
least abie to meet their engagements.
One disaster followed another in quick suc
cession; bankruptcy became the order of the
day; aud, sir, from East to West, from North
to South, in every direction, throughout the
whole country, nothing met the eye but oue
wide spread scene of universal ruin. Like lite
deadly Sirocco, nothing but blight and mildew
followed in the train of these reckless experi
ments. The State Banks, no longer able to bear
up under the accumulated pressure of the times,
with their specie constantly in transitu from
the East to the West, were also compelled, from
the force of circumstances, to close their doors,
and were no longer able to redeem their notes
in coin; and, at the very time, sir, when the
gold anil silver were to have been seen shining
through the interstices of the silken purses of
every farmer, specie vanishes from circulation;
the courtry I ecomes Hooded with irredeemable
paper currency; shin plasters take the place of
small change; and even the government itself,
in a time of profound peace, is Ibrced to the dis
graceful dilemma of issuing its own scrip, in
order to sustain the credit of the State, and to
prevent national bankruptcy. Mr. P. said he
iiid not attempted, nor should he attempt, to
advert to all the measures of the late and pres
ent administration of the general government,
which had been instrumental in inviting these
disgraceful and melancholy results. My object
sir, is to invite tiie attention of gentlemen upon
this floor to a few of the more prominent cau
ses of the present aspect of a flairs; but, after
much palient investigation and no little sober
reflection, I have been irresistibly led to the
conclusion, that the disasters which have fol
lowed. in quick succession, these experiments
upon the currency, like so many pealsof thun
der from the calm and clear sky of a summer's
day, spreading alarm and consternation thro'
all the ramifications of trade and commerce,
can he legitimately traced to the rude touch of
executive and legislative interference with that
most delicate, most sensitive of all subjects in
political economy—finance and the immutable
laws of trade, fam strengthened and amply
fortified in the position which I have assumed,
if I had no other fact to rely upon than that of
the important truth which has now become a
matter of history, that all these results were
foretold and insisted upon as the consequence
of these experiments, at the very time they
were proposed, by every distinguished Whig
orator, in both branches of the national legisla
ture. Sir, the very facts, the very circum
stances, which have since transpired, and
which now exist, were foretold with almost the
precision of prophetic accuracy; yea, were it
not that I am averse to consuming the time of
this committee, I would read you from the doc
uments which I now hold in my hands, which
could not fail to fasten deep conviction upon
the mind of every gentlemen upon this floor,
that these distinguished statesmen and patri
ots fully understood what would follow in the
train of these experiments; and beholding, as
they did, in the vista of futurity, our present em
barrassed condition, faithfully warned the dom
inant party of the country of the evils which
they were about to entail upon an innocent
and confiding people. Their prophetic voices
were unheeded; their faithful admonitions dis
regarded; their lolly patriotism llaughed to
scorn, by the very party, sir, to tchich you be
long, find which now constitutes the majority
upon this floor.
Again, these melancholy disasters weregreat
-Ilv promoted bv the multiplication of State
'Banks, which had grown out of the destruction
of the National Bank, and the apparent care
which President Jackson first evinced toward
these State institutions. He professed to nur
ture and to support them; thev were, for a time,
the objects of his especial solicitude; through
his influence and the influence of the par y, sir,
to which you belong, these institutions were in
creased front three hundred, to near treble that
number, and the banking capital of the country
was multiplied in about the same ratio. At
this very juncture, when these inlant institu
tions hail scarcely been spoken into existence,
and like the helpless child that had not vet
learned to walh> every moment requiring the
kind care and,support of the anxious pa rein, they
—the banks—sir, at such a moment, were
abandoned by their unnatural foster-father; not
only abandoned, hut, in tfie same hour denoun
ced, abused, villified with the most relentless fu
ry, not only by the President himself, but by
all theoflictal organs of the country, us well as
by every petty demagogue in the community,
whose business it is to declaim from the bar
room of your taverns, or from the dark sinks of
iniquity which exist in greater or smaller num
bers in every section of the country. Not on
ly were the banks denounced with hellish fury,
hut, as if urged forward by one wild spirit of
universal destruction, the credit system, the
merchants, and every branch ol American en
terprise, were assailed with the most bitter
feelings by the whole party of the country who,
at that time, and the present, wield the' desti
nies of this nation. Sir, the resolution now up
on your table, and which I am now, in the
honestdischargeofa high and responsible trust,
endeavoring to discuss, is a fit germ of this
wild spirit of ruin which I have just attempt
ed feebly to pourtray. Your resolution declares
all paper money to be pestiferous—to he des
tructive to the interest of our republican insti
tutions, Sic. [Mr. Le Grand, from Baltimore
city, here interrupted the gentleman from Dor
chester, to say that he did not mean State
Banlfpaper.] Mr. P. resumed,and .-aid, then
your resolution which has so long engaged the
attention of this House is a nullity—it is an
empty sound, devoid of meaning; ail its hollow
professions are intended, according to the gen
tleman's explanations, to effect nothing. But,
Mr. Chairman, in spile of the gentleman's ex
planation, 1 beg the privilege of interpreting
the resolution according to the common sense
construction which I am always disposed to
place upon common sense language. If theae
resolutions do not intend to apply to State
bank paper, I would respectfully enquire of
the gentleman to what bank paper they do re-
No. 6.