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Morning herald. [volume] (New York [N.Y.]) 1837-1840, September 06, 1837, Image 1

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To th* two Houses qf Congress, at the cammencc
?mint of the first session of ihe Twenty' fifth Congress.
Fellow-Citiaens of the Senate
and House of Repreaentatives?
The act of the 23d of Juue, 1830, regulating the de
positee of the public money, and directing the em
ployment of State, District ?nd Territorial banks for
that purpose, made it the duty of the Secretary of the
Treasury to discontinue the use of such of them a9
should at any time refuse to redeem their notes in qpe
cie, and to substitute other banks, provided a suffici
ent number could be obtained to receivethe public de
posited upon the terms and conditions therein pre
The general and almost simultaneous suspension
of specie payments bjrthe banks in May last, rendered
the performance of this duty irrnerativej in respect to
those which had been selectod under the act; and
made it, at the same time, impracticable to employ
the requisite number of others, upon the prescribed
conditions. The specific reguietions established by
Congress for thedeposite and safekeeping of the pub
lic moneys, having thus unexpectedly become inope
rative, I felt it to be my duty to afford you an early op
portunity for the eaerciso of your supe visory powers
over the subject. S
I was also led to apprehend that the suspension of
specie payments, increasing the embarrassments be
fore existing in the .pecuniary affairs of the country,
would so far diminish the public revenue, that the ac
cruing receipts into the Treasury, would not, with
the reserved five millions, be sufficient to defray the
unavoidable expensos of the Government, until tiie
usual period for the meeting of Congress ; whilst the
authority to call upon the States, for a portion of the
sums deposited with them, was too restricted to ena
ble the Department to realize a sufficient amount
from tliat source. These apprehensions hive been
justified by subsequent results, which render it cer
tain that this deficiency w^l occur, if additional means
be not provided by Congress *
The difficulties experienced by the mercantile in
terest, in meeting their engagements, induced them to
apply to me, previously to the actual suspension of
specie payments, for indulgence upon their bond* for
duties; and all the relief authorized by law was
promptly and cheerfully granted. The dependence
of the Treasury upon the avails of these bonds, to en
able it to make the deposites with the States required
by law, led me in the outset to limit this indulgence to
the first of September, but it has since been extended
to the first of October, that the matter might be sub
mi 'ted 10 your further direction.
Questions were also expected to arise in ths recess,
in respect to the October instalment of those depo
sites, requiring tk? interposition of Congress.
A provision of another act, pass?j about the same
time, and intended to secure a faithful compliance
wall the obligations of the United States, to satisfy
ail demands upon them in specie or its equivalent,
prohibited the offer of any bank note, not convertible
on the spot into gold or silver at the will of the holder,
and the ability of the government, wilh millions on
deposite, to meet its engagements in the manner thus
required by law, was rendered very doubtful by the
event to which I have referred.
Sensible that adequate provisions for these unex
pected exigencies could only be made by Congress ;
convinced that someofthom would be indispensably
necessary to the public service, before the regular pe
riod of your meeting; and desirous also to enable
yau to exercise at the earliest moment, your full con
stitutional powers for the relief of the country, j
could not? wilh propriety, avoid subjecting you to the
inconvenuncc of assembling at as early a day as the
state sf the popular representation would permit- I
am sure that I have done but justice to your feelings
in believing that this inconvenience will be cheerful
ly encountered, in the hope of rendering your meet
ing conducive to the good of the country.
During the earlier stages of the revulsion through
which we have just passed, much acrimonious dis
cussion arose, and great diversity of opinion existed,
as to its real causes. This was not surprising. The
operations of credit are so diversified, and ihe influ
ences which affect th ;rn so numerous, and often so
subtle, that even impartial and well informed persons
are seldom found to agree in respect to them. To in
herent difficulties were also added other tendencies,
which were by no means favorable to the discovery
of truth. It was hardly to be expectcd that those
who disapproved the policy of the government in re
lation to the currency, would, in the excited state
of public feeling produced by the occasion, fail to at
tribute to that policv, any exlensivo embarrassment
in the monetary affurs of the country. The matter
thus became connected with the passions and con
flicts of party? opinions wereinoreor less affected
by political considerations, and differences were pro
longed which might otherwise have been determined
by an appeal to facts, by the exercise of reason, or by
mutual concession. It is, however, a cheering re
flection, that circumstances of this nature cannot pre
vent ? community so intelligent as our* from ultimate
ly arriving at correct conclusions. Encouraged by
the firm belief of this truth, I proceed to state my
views, so far as may be necessary to a clear under
standing of the remedies, I feel it my duty to propose,
and of the msons by which I have been fed to recom
mend them.
The history of trade in the United States tor the
Ua i three or lour years, affords the most convincing
evidence that our precont condition is chiefly to be at
tributed to over-iction in all the depart tnents of busi
ness; an ov. r-aetion deriving, perhaps, ita first im
pulses from antecedent causes, but stimulated to its
destructive consequences by excessive issues of bank
paper, and by other facilities far the acquisition and
enlargement of credit. At the commencement of the
year 1334, the banking capital of the United States,
including that of the national bank then existing,
amounted to about two hundred millions ef dollars ;
the bank notes then in circulation to about ninety-five
millions; and the loan* and discounts of the banks to
three hundred and twenty-lour millions. Between
that time and the first of January, 1836, being the la
test period to which accurate accounts have been re
ceived, our banking capital was increased to more
than two hundred and fifty-one millions ; our paper
circulaton to more than one hundred and forty mil
lions, and th ' loans and discounts to more thai four
hundred and fifty seven millions. To this vast in
crease are to be added the many millions of credit, ac
quired by means of foreign loans, contracted by the
States and State institutions, and, above all, by the
lavish aacommodations extended by foreign dealers
to our merchants.
Th?- < >ns qui nc< s of thisredundency of credit, and of
the spirit of reckless speculation engendered by it,
were a foreign debt contracted by our citizen^ esti
mated in March last at more than thirty millions of
deU*rs; the extension to traders in the interior of our
country of credits for supplies, greatly beyond the
wants of the people; the investment of thirty-nine
and a half millions ef dollars in unproductive public
lands, in the venrs I9 H ami whilst m thl pre
ceding year the sales amounted to only four and a
half millions; the creation of debts, to an almost
countless amount. for real estate in existing or antici
psted cities and villages, equally unproductive, and at
prices now seen to hare been groatly disproportionate
to thetr real value; the expenditure of immense sums
in improvements which, in many cases, have been
found to be ruinously improvident, the diversion to
other pursuits of much of the labor that should have
been applied to agriculture, thereby contributing to
the expenditure oflarge sums in the importation of
grain from Kurops? an expenditure which, amount
ing m 1834 to about two hundred and fitly thousand
dollars, was, in the first two quarters of the present
year, increased to more than two millions of dollars;
and, finally, without enumerating other injurious re
sults, the rapid growth among all classes, and especial
ly in our great commercial towns, ef luxurious habits,
founded too often on merely fancied wealth, and de
trimental alike to the industry, the resources, and the
morals of eur people,
It was so impossible that such a stale of things
could long continue, that the prospect of revulsion
was present to the minds of considerate men before
it actually came. None, however, had correctly an
ticipated its severity. A concurrence of circumstan
ces inadequate of themselves to produce such wide
spread and calamitous embarrassments, tended so
{'really to aggravate them, that they cannut be over
ooked in considering their history. Among these
may be mentioned, as most prominent the great loss
of capital sustained by our commercial emporium in the
fire ofX>ecembei? 1*35? a loss, the effects of which
were underrated at the time, because postponed for a
season by the great facilities of credit then existing ;
the disturbing effects in our commercial < ities, of the
transftre of the public moneys required by the dej?o
site law of June, 183G, and the measures adopted by
the foreign creditors of our merchants to reduce their
debts, and to withdraw from the United States a
large porUon of our specie.
However unwdhng any of our citizens may hereto
fore have been to assign to these causes the chief in
strumentality in producing the present elate of things,
the d?velopeinvnts8ubsequenily made, and the actual
condition of other commercial countries, must, as it
seems to me,.dispel all remain nydeubte upon the sub
jects. It h?c since appeared thnt evils, similar to
those suffered by <*urselves, have been experienced in
Great Britain, on the continent, and, indeed, through
out the commercial world; and that, in ether coun
tries, as well aakui our own, they have been uniformly
preeeded by an undue enlargement ef the boundaries
of trade, prompted, as with us, by unprecedented ex
pansions of the systems of credit. A reference to the
amount of banking capital, and rhe issues of paper
credits put in circulation in Great Britain, by banks,
and in other ways, during the years 1834, 1835, and
1836, will show an augmenta'ion of the paper curren
cy there, as much disprop?rtioned to the real wants
of trade as in the United States. With this redundan
cy of the paper currency, there arose in that country
also a spirit of adventurous speculation, embracing
the whole range of human enterprise. Aid was pro
fusely given to projected improvements; large invest
ments were made in foreign stocks and loans; credits
for goods were granted with unbounded liberality to
merchants in foreign count ries;~&nd all the means of
acquiring and employing credit were put in active
operation, and extended in their effects to every de
partment of business, and to every quarter of the
globe. The reaction was proportioned in its violence
to the extraordinary character of the events which
preceded it. The commercial community of Great
Britain were subjected to the greatest difficulties,
and their debtors in this country were uot only sudr
denly deprived of accustomed and expected credits,
bat called upon for payments, which, in the actual
posture of things here. coulJ only be made through 2
general press ire, ana at the moat ruinous sacrifices.
In view of these facts, it would seem impossible for
sincere inquirers after truth to resist the conviction,
that the causes of the revulsion in both countries have
been substantially the same. Two nations, the moat
commercial in the world, enjoying but recently the
highest degree of apparent prosperity, and maintain
ing with each other the closest relations, arctsudderi
ly, in a tirne of profound peace, and without any great
national disaster, arrested in their career, and plunged
into a state of embarrassment and distress. In both
countries we have witnessed the same redundancy of
paper money, and other facilities of credit; the same
spirit of speculation ; the same partial successes; the
same difficulties and reverses, and, at length, nearly
the same overwhelming catastrophe. The most ma
terial difference between the results in the two coun
tries has only been, that with us there has also occur
red an extensive derangement in the fiscal affairs of
the federal and state governments, occasioned by the
suspension of specie payments by the banks.
The history of these causes and etiects, in Great
Britain and the United Slates, is substantially the
hi-itory of the revulsion in all other commercial coun
The present and visible effects of these circum
stances on the operations of the government, and on
the industry of thepeoply, point out theobjects which
call for your immediate attention.
They are ? to regulate by law the safe keeping,
transfer, and disbursement, of the public moneys; to
designate the funds to be received and paid by the go
vernment; to enable the treasury to meet promptly
every demand upon it; to prescribe the terms of in
dulgence, and the mode of settlement to be adopted,
as well in collecting from individuals the revenue that
has accrued, as in withdrawing it from former depo
sitories, nnd to devise and aaupt such further mea
sures, within the constitutional competency of con
gress, <ts will be best calculated to revive the enter
pri?e and to promote the prosperity of the country.
For the deposite, transfer and disbursement, of the
revenue, National and State banks have always, with
temporary and limitud exceptions, been heretofore
employed ; but, although advocates of each system
arc still to be found, it is apparent that the events of
the last few months have greatly augmented the de
sire, long existing among the people of the United
States, to sepaiate the fiscal operations of the Gov
ernment from thosoof individuals or corporations.
Again to create a national bank, as a fiscal ag.uit,
would be to disregard the popular will, twice solemn
ly and unequivocally expressed. On no question of
domestic policy is there stronger evidenee tbat the
sentiments of a large majority are deliberately fixed,
and I cannot concur with those who think they see,
in recent events, a proof that these sentiments arc, or
a reason that they should be, changed.
Kventa, similar in their origin and character, have
heretofore frequently occurred, without producing
any such change ; and the lessons of expenenc?muai
be forgotten, if we suuposethat the present overthrow
of credit would have been prevented by the existence
of a national hank. Proneneas to excessive issues
hns ever been the vicc of the hanking system? a tics
a* prominent in national as in state institutions.?
This propensity is as subservient lo the advan ce
ment of private interests in the one as in the other ;
and i hose who direct them both, being principally
guided by the same views, and influenced by thesame
motives, will be equally ready to stimulate ex trava
gance of enterprise by improvidence of credit. How
strikingly is this conclusion sustained by experience.
The bank of the United States, with the vaat pow
ers conferred on it by Congress, aid n?t or coula not
prevent former and similar embarrassments; nor has
the still greater strengsh it has Ween said to possess by
its present ehartir enabled it, 111 the existing emer
gency, to chack other institutions, or even to save it
self. In Great Britain, where, it has been seen, the
same eauscs have l>een attended with the same ef
fects a national bank, possessing powers far greater
than are asked for by the warmest advocate of snch
an instiiHtion here, has also proved unable to prevent
an undue expansion of eredit, and theevrls that flow
from it. Nor can I flnd any tenable ground for the
re establishment of a national hank hi the derange
ment alleged at present to exist in the domestic ex
changes of the country, or in the facilities it may be
capable of affording them. Although ail vantages of
this sort were anticipated when thelirst Rank of the
United States was crested, they were regarded as an
incidental accommodation ; not one which the Fede
ral Government was bound, or could be called upon
to furnish. This accommodation is now, indeed, af
ter the lapae of not many years, demanded froril it aa
among its firat duties ; nna an omission to aid and re
gular commercial exchange, is treated as a ground
of loud and serious complaint. Such results only
serve to exemplify the constant desire, among some
of our citizens, to enlarge the powers of the Go
vernment,and extend itacontrol to subjects with whi h
it ahould not interfere. They can never justify the
creation of an institution to promote such objects. ?
On the contrary, they justly exctie among the cam
mnnity a more diligent inquiry into the eharacter of
those operations of trade, towards which it is desired
to extend such peooliar favors.
The various transaction which bear the name of
domestic exchanges, differ essentially in their nature,
opera ty, and Utility. Oneelassof them consists of
bills of exchange drawn for the purpose of transfer
ring actual capital from one part of th? country to an
other, or to anticipate tha proceeds of property actu
ally transmitied. Bill* of this description are highly
useful in the movements of trade, and well deserve all
the encouragement which can rightfully be given
to them. Another class is made up of bills of ex
change, not drewa to transfer actual capital, nor on
the credit of property transmitted, but to create ficti
tious capital, partaking at once of the character of
notes discounted in bank, and of bank notes in circu
lation, and swelling the mass of paper credits to a
vast extent in the most objectionable manner. Those
bills have formed, for the last few years, a large pro
portion of what are termed the domestic exchanges
of the country, serving aa the means of usurious pro
fit, and constituting the most unsafe and precarious
paper in circulation. This species of traffic, inatcad
of being upheld, ought to be discountenanced by the
government and the ptoplv.
In transferring its funds from place to place, the
government is on the same fooling with the private
citizen, and may resort to the same legal means. It
may do?so through the medium of bills drawn by it
selt, or purchased from others; and 111 these operations
it may, in a mayner undoubtedly constitutional and
legitimate, facilitate rind assist exchanges of individu
als founded on real transactions of trade. The ex
tent to which this may bo done, and the best means of
? fleeting it, are entitled to the fullest consideration.
This has been bestowed by the Secretary of tha
Treasury, and his views will be submitted to yarn in
his report.
Bat it was not designed by the Constitution that the
Government should assume the management of do
mestic or foreign exchange. It is indeed authorized
to regulate hy law the commerce between thu States,
and to provide a general standard o' value, or medi
um of exchange, in gold and silver ; but it .a not its
province to aid individuals in the tranfer of their funds,
otherwise than through the facilities afforded by the
Po6t Office Department. As justly might it be called
on to provide for the transportation of tkeir merchan
dize. These are operations of trade. They ought to
be conducted by those who are interested 111 thern, in
the sa?ie manner that the incidental difficulties of
other pursuits arc encountered by other classes of cit
izens. Such aid has net been deemed necessary in
other countries. Throughout Europe, the domestic as
well us the foreign exchanges are carried en by pri
vate houses, often, if not generally, without the assis
tance of banks. Yet they extend throughout dis.iuct
sovereignties, and far exceed in amount the real ex
change? of the United States. There is no reason
why our own may not be conducted in the same
manner, with equal cheapness and safety. Certainly
this might be accomplished, if it were favored by
those most deeply interested; and few can doubt that
thfir own interest, as well as the general welfare of
the country, would be promoted by leaving such a
subject in tiW hands ff those to whom it properly be
A system founded on private interest, CnltllJnso,
and competition, without the aid of legislative grants
or regulations by law, would rapidly prosper! it
would be free from the influence of political agitation
and extend the same exemption to trade itself; audit
would put an end to those complaints of neglect, par
tiality, injustice, and oppression, which a c the una
voidable results of interference by the government, in
the proper concerns of individuals. All former at
tempts on the part of the government to carry its le
gislation, in this respect, further than was designed by
the constitution, have in the end proved injuriousand
have served only to convince the great body of the
people, more and more, of the certain dangers of
blending private interests with the operations of pub
lie business ; and there is no reason to suppose that
a repetition of them now would he more successful.
It cannot be concealed that there exists, in our
commanity, op nions and feelings on this subject in
d:rect opposition to each other. A Urge poJtion of
them, combining great intelligence, activity, an ! in
fluence, are no doubt sincere uj their belief that tha
operations of trade ought to be assisted by such a
connection; they regards National bank as necessary
for this purpose, and they are disinclined to every
measure that does not tend, sooner or later, to the es
tablishment of such an institution. On the other
hand, a majority of the people are believed to be irre
concilably opposed to that measure; they consider
such a concentration of power dtingeroua to their liber
ties; and many of them regard it as a violation of
the constitution. This collision of opinion has, doubt
less, caused much of the embarTasdtneuU to which
the commercial transactions of the country hare late
ly been exposed. Banking has become a political
topic ef the highest interns', and trade has suffered in
the confl ct of parties. A speedy termination of this
state ef things, however desirable, is s -arcely to be
ixpccted. We have seen for nearly half a century,
that those who advocate a National bank, by what
ever motive they may be influenced, constitute a por
fon 'four community too numerons to allow ns to
hope for anearly abandonment of their favorite plans.
On the other hand, they must indeed form an erroneous
estimate of the in telligenee and temper of the American
people, who suppose that thev have continued, on
slight or insufficient grounds, their persevering oppo
sition to such an institution; or that they enn be induc
ed by pecuniary pressure, or by any other combina
tion of circumstance?, to surrender principles they
have so long and so inflexibly maintained.
My own views of ihe ribjoet arc unchanged. 1 hey
hav? been r<;pratedly and unrenervedljr intioaiKed 10
my f -How-citizens, who, with full knowledge of them,
conferred upon me the two highest offices of the Go
vernment. On the last of these occasions, I felt ii due
to the people to apprize them distinctly, that, i'i the
event of my election, I would not he able toco-opcr
ate in the re-eatablishn?ent of a national bank. To
these sentimcnt?, 1 have now only to add the expres
sion of an increased conviction, that the re-eatabhfh
ment of such a bank, in nny form, whilst it would not
accomplish the beneficial purpose promised by its ad
vocates, would impair the rightful supremacy of the
aular will ; injure the character and diminish the
jence of our political system ; and bring once
more into existence a concentraied moneyed power,
hostile to the spirit, and threatening the permanency,
of our republican institutions.
Local banks have been employed for the deposite
and distribution of the revenue, at all time* partinl!y,
and, on three differi-nt occasions exclusively; first,
anterior to the establishment of the first Rank of the
United States ; secondly, in the interval between the
termination of that institution and the charier of its
successor ; and, thirdly, during the limitrd period
which has now so abruptly closed. The connection
thus repeatedly attempted, proved unsatisfactory on
each successive occasion, notwithstanding thevar.ous
measures which were adopted to facilitate or in?nre
its sucoe-a. On ihe last occasion, in the year IR33,
the employment of the State bank* was guarded es
pecially in every way which experience and caution
could suggest. Personal security was required for
safe-keeping nnd prompt payment of the moneys to
be received, and full returns of their condition were,
from time *o time, to be made by the depositories.
In the first strigesthe measure was eminently suc
cessful, notwithstanding th<3 violent opposition of the
Bank of the United States, and the unceasing efforts
made to overthrow it. The selected banks performed
with fidelity, and without any embarrassment to
themselves or to the community, their engagements
to the government , and the system promised to be
permanently useful. But when it becainr necessary,
under the act of'June, 1R36, fo withdraw from th? m
the public money, for the purpose of phcing it in ad
ditional institutions, or of transferring it to the States,
they found it, in many esses, inoonvi mant to comply
with the demands of the Treasury, and ntimerousand
Basing application were made for indulgence sr r?
As the inatalments under the deposite law lu
cerne payable, their own embarrassments, and the
necessity under which they lay of curtailing their
diaeoiints and calling in their debts, increased the ge
neral distress, and contributed, with othet canoe*, to
hasten the revulsion in which, at length. tbejr, in
oommon with the other banks, were fatally in
Under these circumatancea, it becomes our eolenin
duty to inquire whether there are not, m any connec
tion between the government and banks of imiic,
evils of great magnitude, inherent in ita very nature,
and against which no precautions can effectually
Unforeseen in the organization of the government,
and forced on the Treasury by early necessities, the
practice of employing hanks, was, in truth, from the
beginning, more a measure of emergency than of
sound policy. When we started into existence as a
nation, in nddition to the burdens of the new govern
ment, we assumed all the large but honorable load of
debt which was the price of our liberty; but we hesi
tated to weigh down the infant industry of the coun
try bv resorting to adt quale taxation for the necessary
revenue. Tf e facilities of banks, in return for the pri
vileges they acquired, were promptly offered, and
perhaps too readily received, by nn embarrassed Trea
During the long continuance of a national debt,
and the intervening difficulties o. a foreign was, the
l connection was continued from motives of conveni
ence; but thebo ca vibes have long since passed a way.
?? c have no emergencies that make banks necessary
t? aid the wants of the Tr< asury; we have no l?ad of
national debt to provide for, and we Imve on actual
oeposite n large surplus. No public interest, therefore
now requires the renewal of a connection that circum
stances have dissolved. The complete organization
of our government, the abundance of our resources,
the general harmony which prevails between thediffe
rent states, and with foreign poy/ers, all enable us
now to select the system most consistent with the
constitution, and most conducive to the oublic welfare.
?Should we, then, connect the Treasury for a fourth
time with the local banks, it can only be unuV* n con
viction that past failures have arisen from acciu^tal,
uot umereni defects.
A danger, difficult, if not impossible, to bo avoided
in such an arrangement, id made strikingly evident in
the very event by which it his now been defeated. A
sudden act of the bank* intrusted with the funds of
the peopl , deprives the Treasury, without fault o." a
gency ol the government, of the ubility to pay its cre
ditors in the c-.rrency tht;y have by law a right to de
mand. 1 ms circumstance no fluctuation of commerce
could have produced, if the public revenue had been
collected in tao legal currency, and kept in that form
by the officers of the Treasurp. The citizen whose
money was in bank receives it back, since the sus
pension, at a sacrifice m its amount ; whilst he who
Kept it in the legal currency of thi country, an J in
his own possession, pursues, without loss, the current
ol his business. The government, placed in the situ
ation of ine former, is involved in embarrassments it
could not have suffered had it pursued the course of
the latter. These embarrassments are, moreover,
augmented (.y those salutary and just laws which for
bid it to use a depreciaied cwtfeucy, and, by so dom*,
take from iae government theobility which individu
als have of accommodating their transactions ro such
a catastrophe.
A system which can, in a time of profound '?eac
when there w ? Jar gq bv, thai suddenly
prew nt (rte application end the use of the money of
the people, in the manner and for the objects thoy have
directed, cannot be wi.v, but who can think, without
painful reflection, that, under it, the same unforseen
events might have befallen us in the midst of s war,
"5 u* "om ust the moment when mast want
ed, the use of those very means whioh were treasur
ed up to promote the national welfare and gnard our
national rights! To such embarrassments and to
such dangers will this Governmenl be always expos
ed, whilst it takes the moneys raised for, nnd necessa
ry- to, the public senrire, out of ihe hands of its own
om-.-ers, and converts thom into a mere right of action
against corporations entrust, d with the possession of
them. iNorc^n such results be effectually guarded
against in such a system, without investing the Execu
tive with a control over the banks themselves, whe
tner btate or National, that might with reason be ob
jected to. Ours is, probably, the only Government
in the world that is liable, in the management of its
fiscal conccrns. to occurrences like these. But this
imminent risk is not only the danger attendant on the
surrender of the public m >ni y to the custody and
control of lecal corporations. Though the object is
aid to the 1 reasury, its eflect may be to introduce into
the op . rations of the Government influences the most
"uoile, founded on in-ercets the most selfish.
The use by the banks for their own benefit of the
money deposited with them, has received the sanc
tion of the government from the commencement of
this conn ;ction. Th? money received from the peo
p'e, instead of being kept till it is needed for their use
is, in convquencjof this author 'y, a fund on which
d scounts are made for the profit of those who hap
pen to be owners of s'ock in th ? binks selected as
depositories. The suppose*! apd often exaggerated
advan ages of such a boon will always causeit to be
sought for wi'h avidity. I will not stop to consij.-r
on whom the imNonsge incident to it is to be con i r
ed ; whether the selection and control he trusted to
C mgnssor the Kt.'cutive, either will bo subjected
to appeals made in every form which the sagactty ?f
interest can suggest. The banks, under such n sys
tem, are stimulated to make the most el their fortunate
acquisition. The depositee are treated as an increase
oi capital. I. nans and circulation are rashly aug
men ted ; and when the public exigencies require a re
turn, it is attended with embarrassments uot provided
for or foreseen. Thin hanks that thought tluimselves I
most fortunate when the public funds were received
find themselves most embarrassed when the season
of payment suddenly arr.ves.
Unfortunately, too, the ev, Is of the system are not
limited to the banks. It stimulates a general rash
ness of enterprise, and aggravates the fluctuations of
commerce and the currency. This result was strik
ingly exhibited during the operations of the late depo
?ite system, and especially in the purchase of pub ic
lands. The order which ultimately direcud the pay
ment of gold and silver in s.icli purchases greatly
checked, but could Dot altogether prevent, the evil.?
Specie was indeed more difficult to be procured than
the notes which the banks could themselves creatc at
pleasure : but still, being obtained from them as a
loan, and returned as adeposite, which they were a
gain at liberty to use, it only passed round the circle
wnh diminished sped. This operat.on could not have
keen performed had thefindsof tuegovcrnment gone
int* the treasury, to be regularly disbursed, and not
into banks, to be loaned out for their own profit, while
they were permitted to substitute for it a credit in ac
( .Hint.
Iii expressing these sentiments, I desire not lo
undervalue the benefits of a Military credit lo any
branch of enterprise. The credit bestowed on probity
and in lustry i* the just reward of (Want, and an honor
able mcwntiv ? to further N'oneoppose it
who love their country an<t understand it* welfare.
But when it i? unduly encouraged? when it ta made to
inllame the public mind wit*) the temptations of sud
den mid unsubstantinl wraith ? when it turna indua
try into pith* that lead sooner or later to disappoint
ment nnd diatreta? it becomes liable to censurc, and
noeda correction. Far from helping probity and in
dustry, the ruin to which it lend* fall** moat severely
on the great laboring classee, who are thrown sudden
|y out of employment, and, , by the failure of magnift
cent schemes, never intruded to enrich them, are de
prived in a moment of their only resource. Abuse*
of credit and excesses m speculation will happen in
desore of the most salutary lawaj DO Government
perhaps can altogether pr-vent them; but surely
every Government can refrain from contributing the
stimulua that calls them into life.
Since, t her i fore, expeixnce has shown, that to lend
the public money to the local banks ia hazardous to
the operations of the Government, at least of doubtful
benefit to the institutions them set vat, an< productive
of disastrous derangement in the business and cur
rencf of the country, is it the part of wiadom again
to renew t^e connection 1
It ta true thm such an agency is in many respects
convenient to the Treasury, but it ia not indispensa
ble. A limitation of the expanars of the Government I
to ita actual wnnta, and of the revenue to those expen
?ee, with conveaient means for ita prompt application
to the purposes for which it was raised, are the oh
i'lcta which we should seek to accomplish. The col
lection, safe keeping, transfer, and disbursement of
the public money can, it in believed, be well managed
by ofRoai* of the Government. Its collection, end
to a (real extent, its disbursement aleo, have indeed
been hitherto conducted solely by them ; neither Na
tional nor State banks, when employed, being re
quired ta d? more than keep it safely while in ih?r
custody, and ttansfer and pay it in ?uch portions, and
at such times as the Tieaeury bhall direct.
Surely banks are not more able than the govern
ment to secure the money in their possession against
accident, violence, or fraud. The assertion that they
are so, must assume thai a vault in a hank is strong
er than a vajhin the Treasury? and that directors,
cashiers, and clerks, not se cctcd by the government,
nor under its control, nre mod worthy of confidence
than officers selected from the people, and responsi
ble to the government ; officers hound by official
oaths and bonds for a faithful performance of their
duties, and constantly subject to the supervision of
Ttie difficulties of transfer, and the aid heietofore
rendered by banks, have been less than is usually
supposed. The actual accounts show that by tar the
larger portion of payments ia mado within short or
convenient distances from the pla- es of collection ?
and the who'e number of warrants issued at the
Treasury in the year 1834 ? a .year, the results of
which will, it is believed, aiFord u safe test for the fu
ture ? fell short of five thousand, or on average of
less than one daily for each state? in the city of New
York they did not average more than two a day, and
at the city of Washington only lour.
The difficulties heretofore existing ar-r, moreover
daily lessened by an increas'.iin the eh' apneas #and
facility of communication? and it may ho asserted
with confidence, that the necessary transfers, as well
at the safe-keeping and disbursements of the public
moneys, can be with safety and convenience accom
^liahed through the ag-nctfg of Treasury officer*. ?
Tk'W opinion I>as been, in pome degree, confirmrdly
actudi experience, since the discontinuance ?f the
hanks as fiscal agents, in May last? a period which,
from th e embarrassments in commercial intercourse,
presente 1 obstacles as great as a ly that may he here
after appi ehended.
Tbt rnai vier of keeping the public money since that
period, isfu My stated in the report of the Secreta; j
the Treasury ?? that officer also suggest* the JWuprie
ty of sssignuu *? by law, certain additional nE-uties to
existing estabfu Omenta und officers, which, with the
modifications at. "d safeguards referred Co iAy him, will,
he thinka, enable" 'he department to continue to per
form this branch yf the public service without any
material addition ^ "her to tint ir number or to the pre
sent expense. The extent of the business to be trans
acted has already bt stated, and in respect to the
amount of money wit b which the officer* employed
would be entrusted at any one time, it appears that,
assuming a balance of , Vve millions to be at all times
kept in tne treasury, at: d the wholeof.it left in the
hands of the collectors a. *d receivers, the proportion
of each would not exceed *** average of thirty thous
and dollars, but that, deducing one million for the
use of mint, and assuminT the remaining lour mil
ii ?,i ??? *l - 1 "n<U Of yav halfuf the present num
lloftS tO oe in i.ie h. ? ,ike,
berof officers, n supposition ? m ,b? uBU j.ftf ' ,,h
correspond wirh the fact, the su .. U1
would atill be less than the mnoun .|S '
bonds now taken from the receivers of pi.
Ev.rv apprehension, however, on the subjtc " -fi-Y
in respect to the safety of the money, or the fai?
discharge of these fiscal transactions, may, it appears
to me, be effectually removed by addin* to the pre
sent means of the treasury the establishment by law,
at a few important points of offices for the d'posiie
and disbursement of such portions of the public reve
nue as cannot, with obvious safety and convenience,
be left in the possession of the collecting officers until
paid over by them to the public creditors. Neither the
amounts retained in their hand?, nor those deposited
in the offices, would, in an ordinary condition of the
revenue, he larger in most ca?es than ihoscoften un
der the control of disbursing officers of the Army and
Navy, and might be made entirely safehv requiring
such securities, and exercising such controlling super
vision, ?? Congress may by law prescribe. The prin
cipal officers whose appointments would become ne
cessary under this pian, taking the largest number
suggested by the Secretary of the Treasury, would not
exceed ten; nor the additional expens s, at the same
estimate, sixty thousand dollars a year.
There can be no doubt that theobligsti >n of those
who are entrusted with iheaflarrsof Government, to
conduct them with ns little cost to the nation ss is
consistent with the public int. rest ; and it is for Con
giess, and ultimately for the peop:e, to decide whe
ther the benefits to be derived fropi ketping our fiscal
concerns apart, and s;vcrn: the connexion which
has h't.ierto existed between the Government and
banks, offer sufficient advantages lojnstify the neces
sary expenses. If ihe object to be accomplished m
deemed important to the fu'ure wi-l.are of the coun
try, I canot allow myself to believe that the addition
to the public expenditure, of compara'ivly so sm-dl
an amount as will be neccssary to effect it, will beob
jected to by the people.
It will be seen by the report of the Postmaster Ge
neril, herewith communicated, that the fiscal n flairs
of that Department have be<*n suecessfullr conducted
since May last upon the princplo of dealing only in
the legal currency of the United Staff, and that it
needs no legislation to maintain its credit, and facili
tate the management of irs eo-ieerns; the existing
laws being, in the opinion of that officer, ample for
those objects.
Difficulties will doubtless bp rncniint'-red for n sea
son, und increased services required from tho public
functionaries; such ore usually incident to the com
mencement of every system, but they will be greatly
lessened in the progress of its operations.
The-powcr and influence supposed to hp connected
with the custody and disbursement of the public mo
ney, are topic* on which 'he public mind is natural
ly, and with great propriety, peculiarly fsensitive. ?
Much han been said on them, in reference to the pro
posed separation of the Government from the bank
ing institutions; and surely no one can object to any
appeals or animadversions on the suhiect, which are
consistent with facts, and evince a proper respect for
the intelligence of the people. If a Chief Magistrate
may be allowed to spenk for himself, on such a point,
I csn truly say, that to me nothing would be more
acceptable than the withdrawal from the Executive,
to the greatest practicable extent, of all concern in
the custody and disbursement of the public revenue*
not that 1 would shrink from any responsibility cast
upon me by the ilaties of mv offiee; hut because it ia
my firm belief, that its capacity for usefulness is in no
degree promoted by the possession of any patronage
not actually necessary to the performance of those
duties. But nnder our present form of Government,
the intervention of the Executive officers in the cus
tody and disbursement of the public money seems to
be unavoidable ; and before it can be admitted that
ilie influence and power of the Executive would be
increased by dispensing with the npeney of banks,
the nature of that intervention in such an agency
must be carefully regarded, and a comparison must
be instituted between its extent in the two eases.
Th* revenue run only he collected by officers ap
noinl?d hv the Pmidcm, with the adrce iind con
tent of the Senate. The public money", in the firat
mstnnce, must therefore, in nil ewM, paes thro?i*h
handa aHected by the executive* Other officera ap
pointed in the same way, or, a? in aome caaea. by the
Prr aident alone, mnat also be entrusted with ?hem
when drawn for the purpose of disbursement. It is
thna seen th.it, even when banka arc employed, the
public funda must twice paaa through the handa of
Executive officer* Besid?? this, the head of the
Treasury Drptrtmen', who also holds bia office at
I be pleasure of t '*?? President, nnd some other officers
of the s*?me depirtment. must ne> e?snr ly be in vested
with moreor less p ?wi nn the selectioi continuance
and supervision of the banka that may he employed.
The tpiestwn is then narrowed to the single pa il,
whether, in the intermediate stage bet ween tbeoolleo
tion and disbursement of the public mon^j', the n?e?
cy of banka ia necessary to avoid a dangerous exten
sion of the patronage and influence of i he Executive?
Hut ia it clear that the connection of the RfefMiiv*
with powerful moneyed institutions, capable of minta
tenng to tha mtrrrsts of men in points where i hey
are moat accessible to corruption, ia Ws? liable to

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