the constant tendency to an excessive issue of bank-notes in prosperous times, when so large a portion of the community are anxious to obtain accommodation, and who are disappointed when negotiable paper is refused by the banks; not reflecting that it would not be safe to discount beyond the limits I have assigned for a safe circulation, however good the paper offered.

On what, then, ought a paper currency to rest? I would say on demand and supply simply, which regulates the value of every thing else the constant demand which the Government has on the community for its necessary supplies. A medium resting on this demand, which simply obligates the Government to receive it in all of its dues, to the exclusion of every thing else except gold and silver, and which shall be optional with those who have demands on Government to receive or not, would, it seems to me, be as stable in its value as those metals themselves, and be as little liable to abuse as the power of coining. It would contain within itself a self-regulating power. It could only be issued to those who had claims on the Government, and to those only with their consent, and, of course, only at or above par with gold and silver, which would be its habitual state; for, as far as the Government was concerned, it would be equal in every respect to gold and silver, and superior in many, particularly in regulating the distant exchanges of the country. Should, however, a demand for gold and silver from abroad, or other accidental causes, depress it temporarily, as compared with the precious metals, it would then return to the Treasury; and, as it could not be paid out during such depression, its gradual diminution in the market would soon restore it to an equality, when it would again flow out into the general circulation. Thus there would be a constant alternate flux and reflux into and from the Treasury, between it and the precious metals; but, if at any time a permanent depression in its value be possible from any cause, the only effect would be to operate as a reduction of taxes on the community, and the only sufferer would be the Government itself. Against this its own interest would be a sufficient guaranty.

Nothing but experience can determine what amount and of what denominations might be safely issued; but it may be safely assumed that the country would absorb an amount greatly exceeding its annual income. Much of its exchanges, which amount to a vast sum, as well as its banking business, would revolve about it, and many millions would thus be kept in circulation beyond the demands of the Government. It may throw some light on the subject to state that North Carolina, just after the Revolution, issued a large amount of paper, which was made receivable in dues to her. It was also made a legal tender, but which, of course, was not obligatory after the adoption of the federal constituA large amount-say between four and five hundred thousand dollars-remained in circulation after that period, and continued to circulate for more than twenty years, at par with gold and silver during the whole time, with no other advantage than being received in the revenue of the State, which was much less than $100,000 per annum. I speak on the information of citizens of that State, on whom I can rely.

tion.

But, whatever may be the amount that can be circulated, I hold it clear that, to that amount, it would be as stable in value as gold and silver itself, provided the Government be bound to receive it exclusively with those metals in all its dues, and that it be left perfectly optional with those who have claims on the Government to receive it or not. It will also be a necessary condition that notes of too small a denomination should not be issued, so that the Treasury shall have ample means to meet all demands, either in gold or silver, or the bills of the Government, at the option of those who have claims on it. With these conditions, no further variation could take place between it and gold and silver than that which would be caused by the action of

commerce.

[SEPT. 18, 1837.

An unusual demand from abroad for the metals would, of course, raise them a little in their relative value, and depress relatively the Government bills in the same proportion, which would cause them to flow into the Treasury, and gold and silver to flow out; while, on the contrary, an increased demand for the bills in the domestic exchange would have the reverse effect, causing, as I have stated, an alternate flux and reflux into the Treasury, between the two, which would at all times keep their relative values either at or near par.

No one can doubt that the fact of the Government receiving and paying away bank-notes in all its fiscal transactions is one of the principal sources of their great circulation; and it was mainly on that account that the notes of the late Bank of the United States so freely circulated all over the Union. I would ask, then, why should the Government mingle its credit with that of private corporations? No one can doubt but that the Government credit is better than that of any bank-more stable and more safe. Why, then, should it mix it up with the less perfect credit of those institutions? Why not use its own credit to the amount of its own transactions? Why should it not be safe in its own hands, while it shall be considered safe in the hands of 800 private institutions scattered all over the country, and which have no other object but their own pri vate profits, to increase which they almost constantly extend their business to the most dangerous extremes? And why should the community be compelled to give six per cent. discount for the Government credit blended with that of the banks, when the superior credit of the Government could be furnished separately, without discount, to the mutual advantage of the Government and the community? Why, let me ask, should the Government be exposed to such difficulties as the present, by mingling its credit with the banks, when it could be exempt from all such, by using by itself its own safer credit? It is time the community, which has so deep an interest in a sound and cheap currency, and the equality of the laws between one portion of the citizens of the country and another, should reflect seriously on these things-not for the purpose of oppressing any interest, but to correct gradual disorders of a dangerous character, which have insensibly, in the long course of years, without being perceived by any one, crept into the state.

The question is, not between credit and no credit, as some would have us believe; but in what form credit can best perform the functions of a sound and safe currency. On this important point I have freely thrown out my ideas, leaving it to this body and the public to determine what they are worth. Believing that there might be a sound and safe paper currency founded on the credit of Government exclusively, I was desirous that those who are responsible and have the power should have availed themselves of the opportunity of a temporary deficit of the Treasury, and the postponement of the fourth instalment intended to be deposited with the States, to use them as the means of affording a circulation for the present relief of the country and the banks, during the process of separating them from the Government; and, if experience should justify it, of furnishing a permanent and safe circulation, which would greatly facilitate the operations of the Treasury, and afford, incidentally, much facility to the commercial operations of the country. But a different direction was given; and when the alternative was presented, of a loan, or the withholding the fourth instalment from the States, I did not hesitate to give a decided vote for withholding it. My aversion to a public debt is deep and durable. It is, in my opinion, pernicious, and is little short of a fraud on the public. I saw too much of it during the late war not to understand something of the nature and character of public loans. Never was a country more egregiouslyˇimposed-on.

Having now presented my views of the course and the

measures which the permanent policy of the country, looking to its liberty and lasting prosperity, requires, I come finally to the question of relief. I have placed this last-not that I am devoid of sympathy for the country in the pecuniary distress which now pervades it. No one struggled earlier or longer to prevent it than myself; nor can any one more sensibly feel the widespread blight which has suddenly blasted the hopes of so many, and precipitated thousands from affluence to poverty. The desolation has fallen mainly on the mercantile class-a class which I have ever held in the highest estimation. No country ever had a superior body of merchants-of higher honor, of more daring enterprise, or of greater skill and energy. The ruin of such a class is a heavy calamity, and I am solicitous, among other things, to give such stability to our currency as to prevent the recurrence of a similar calamity hereafter. But it was first necessary, in the order of things, that we should determine what sound policy, looking to the future, demands to be done at the present juncture, before we consider the question of relief, which, as urgent as it may be, is subordinate, and must yield to the former. The patient lies under a dangerous disease, with a burning thirst and other symptoms, which distress him more than the vital organs which are attacked. The skilful physician first makes himself master of the nature of the disease, and then determines on the treatment necessary for the restoration of health. This done, he next alleviates the distressing symptoms as far as is consistent with the restoration of health, and no further. Such shall be my course. As far as I possibly can, consistently with the views I entertain, and what I believe to be necessary to restore the body politic to health, I will do every thing in my power to mitigate the present distress. Further I cannot go.

After the best reflection, I am of the impression that the Government can do but little in the way of relief, and that it is a case which must be mainly left to the constitution of the patient, who, thank God, is young, vigorous, and robust, with a constitution sufficient to sustain and overcome the severest attack. I dread the doctor and his drugs much more than the disease itself. The distress of the country consists in its indebtedness, and can only be relieved by the payment of its debts. To effect this, industry, frugality, economy, and time, are necessary. I rely more on the growing crop-on the cotton, rice, and tobacco, of the South-than on all the projects or devices of politicians. I am utterly opposed to all coercion by this Government. But Government may do something to relieve the distress. It is out of debt, and is one of the principal creditors both of the banks and of the merchants, and should set an example of liberal indulgence. This I am willing to give freely. I am also prepared to vote freely the use of Governmant credit in some safe form, to supply any deficit in the circulation during the process of recovery, as far as its financial wants will permit. I see not what more can be safely done. But my vision may be obtuse upon this subject. Those who differ from me, and who profess so much sympathy for the public, seem to think that much relief may be afforded. I hope they will present their views. I am anxious to hear their prescriptions; and I assure them that whatever they may propose, if it shall promise relief, and be not inconsistent with the course which I deem absolutely necessary for the restoration of the country to perfect health, shall cheerfully receive my support. They may be more keen-sighted than I am as to the best means of relicf, but cannot have a stronger disposition

to afford it.

We have, Mr. President, arrived at a remarkable era in our political history. The days of legislative and executive encroachments, of tariffs and surpluses, of bank and public debt, and extravagant expenditure, are past for the present. The Government stands in a position disentangled from the past, and freer to choose its future course VOL. XIV.-5

[SENATE.

We are

than it ever has been since its commencement. about to take a fresh start. I move off under the Staterights banner, and go in the direction in which I have been so long moving. I seize the opportunity thoroughly to reform the Government; to bring it back to its original principles; to retrench and economize, and rigidly to enforce accountability. I shall oppose strenuously all attempts to originate a new debt; to create a national bank; to reunite the political and money power-more dangerous than that of church and state-in any form or shape; to prevent the disturbances of the compromise, which is gradually removing the last vestige of the tariff system; and, mainly, I shall use my best efforts to give an ascendency to the great conservative principle of State sovereignty, over the dangerous and despotic doctrine of consolidation. I rejoice to think that the Executive department of the Government is now so reduced in power and means, that it can no longer rely on its influence and patronage to secure a majority. Henceforward it can have no hope of supporting itself but on wisdom, moderation, patriotism, and devoted attachment to the constitution, which I trust will make it, in its own defence, an ally in effecting the reform which I deem indispensable to the salvation of the country and its institutions.

I look, sir, with pride to the wise and noble bearing of the little State-rights party, of which it is my pride to be a member, throughout the eventful period through which the country has passed since 1824. Experience already bears testimony to their patriotism, firmness, and sagacity; and history will do it justice. In that year, as I have stated, the tariff system triumphed in the councils of the nation. We saw its disastrous political bearings; foresaw its surpluses and the extravagances to which it would lead. We rallied on the election of the late President to arrest it, through the influence of the Executive department of the We then fell back upon Government. In this we failed. the rights and sovereignty of the States, and by the action of a small but gallant State, and through the potency of its interposition, we brought the system to the ground, sustained as it was by the opposition and the administration, and by the whole power and patronage of the Government. The pernicious overflow of the Treasury, of which it was the parent, could not be arrested at once. The surplus was seized on by the Executive, and, by its control over the banks, became the fruitful source of Executive influence

and encroachment. Without hesitation, we joined our old opponents on the tariff question, but under our own flag, and without merging in their ranks, and made a gallant and successful war against the encroachments of the Executive. That terminated, we part with our late allies in peace; and move forward, lag, or onward who may, to secure the fruits of our long but successful struggle, under the old republican flag of 1798, which, though tattered and torn, has never yet been lowered, and, with the blessing of God, never shall be with my consent.

On concluding his speech, Mr. C. submitted his ameudment, which provided that from and after the 1st of January next, three-fourths of the money due to the Government may be paid in notes of specic-paying banks; that from and after the 1st of January 1839, one-half might be paid in such notes; one-quarter after the 1st of January, 1840; and that, from and after the 1st of January 1841, all sums due the Government for customs, lands, &c. shall be paid only in the legal currency of the United States, or in such notes, bills, &c., as should by law be ordered.

Mr. WEBSTER rose, and inquired of Mr. C. to what bill it was proposed to make this an amendment.

Mr. CALHOUN replied, to one called the divorce bill between the Government and the banks, which he said was just ahead.

Mr. BENTON, after expressing his entire concurrence in the amendment of Mr. CALHOUN, sent to the Chair two

"to

amendments of his own, which he said comprised the substance of the bill introduced by him two years ago, re-establish the constitutional currency of the country." His first amendment provides that, after a day to be specified, all the public dues should be paid in gold and silver only, and in Treasury notes and land scrip, as might by law be authorized; and the second provides that, after the resumption of specie payments by the banks, the Treasury should begin with specie payments.

[These amendments, together with Mr. CALHOUN's, were ordered to be printed.]

Mr. B. said he should not have risen in this debate, had it not been for the misapprehensions which seemed to pervade the minds of some Senators as to the character of the bill. It is called by some a paper-money bill, and by others a bill to germinate a new national debt. These are serious imputations, and require to be answered, not by declamation and recrimination, but by facts and reasons, addressed to the candor and to the intelligence of an enlightened and patriotic community.

I dissent from the imputations on the character of the bill. I maintain that it is neither a paper-money bill, nor a bill to lay the foundation for a new national debt; and will briefly give my reasons for believing as I do on both points.

There are certainly two classes of Treasury notes--one for investment, and one for circulation; and both classes are known to our laws, and possess distinctive features, which define their respective characters, and confine them to their respective uses.

The notes for investment bear an interest sufficient to induce capitalists to exchange gold and silver for them, and to lay them by as a productive fund. This is their distinctive feature, but not the only one; they possess other subsidiary qualities, such as transferability only by endorsement-payable at a fixed time-not re-issuable-nor of small denomination-and to be cancelled when paid. Notes of this class are, in fact, loan notes-notes to raise loans on, by selling them for hard money—either immediately by the Secretary of the Treasury, or, secondarily, by the creditor of the Government to whom they have been paid. In a word, they possess all the qualities which invite investment, and forbid and impede circulation. The act

of 1812 authorized an issue of notes of this description. They bore five and two-fifths per cent. interest, with an express clause that the Secretary of the Treasury might raise money upon them by loau. I presume there are Senators present who were members of the House of Representatives in 1812, who gave the sanction of their approbation to the Treasury note law of that year, and who would be very unwilling to hear the epithets applied to that law which are lavished upon this bill, which is copied from it.

The Treasury notes for currency are distinguished by features and qualities the reverse of those which have been mentioned. They bear little or no interest. They are payable to bearer-transferable by delivery-re-issuable of low denominations-and frequently reimburseable at the pleasure of the Government. They are, in fact, paper money, and possess all the qualities which forbid investment, and invite to circulation. The Treasury notes of 1815, were of that character, except for the optional clause to enable the holder to fund them at the interest which commanded loans-at seven per cent.

These are the distinctive features of the two classes of notes. Now try the committee's bill by the test of these qualities. It will be found that the notes which it authorizes belong to the first named class; that they are to bear an interest, which may be six per cent.; that they are transferable only by endorsement; that they are not re-issuable; that they are to be paid at a day certain, to wit, with in one year; that they are not to be issued of less denomi

[SEPT. 18, 1837.

nation than one hundred dollars; are to be cancelled when taken up; and that the Secretary of the Treasury is expressly authorized to raise money upon them by loaning them.

These are the features and qualities of the notes to be issued, and they define and fix their character as notes to raise loans, and to be laid by as investments, and not as notes for currency, to be pushed into circulation by the power of the Government, and to add to the curse of the day by increasing the quantity of unconvertible paper

money.

Bids

The execution of the act, and especially the cardinal feature of the quantum of interest, is left to the President and the Secretary of the Treasury. I presume it will be executed as a law to borrow money; and in that point of view the interest was left open, under a maximum limit, as is proper to be done in all propositions for loans. may be invited by advertisement; the competition of lenders may fix the interest; capitalists may fix it by competition, though nominally left to the discretion of the President and Secretary; and at whatever rate it is thus fixed-at whatever rate a loan of gold and silver is commanded-at that rate the whole issue, made at any one time, ought to go. There should not be two rates of interest-a high one for the independent and opulent capitalist, and a low one for the helpless and necessitous public creditor.

This is my opinion of the character of these Treasury notes, and of the mode of using them. I cannot doubt but that lenders will present themselves, and that the whole ten millions may be borrowed in gold and silver just as fast as the Government needs it. That opinion is formed upon data-upon the great amount of specie now in the country, its unproductiveness to its present holders, and the facility with which large amounts of specie were borrowed immediately after the bank suspensions and the commercial revulsions of 1819. The specie in the United States cannot now be less than it was six months ago, to wit, eighty millions of dollars; for it is shown by the customhouse reports, and other data, that, notwithstanding the efforts to ship it to Europe, the imports and exports are about even during that time; and that, taking the whole fiscal year together, the imports now exceed the exports by nearly four millions of dollars; and that near $900,000 in gold have been coined in the first three quarters of the present calendar year. The specie in the country cannot, therefore, be less than $80,000,000, and, upon the calculation of last year, is more. The whole of this vast amount is lying idle, barren, and unproductive to its owners-not that they are all unwilling to lend it, and to receive interest, but for want of borrowers in whom they have confidence. The United States will present that borrower, and will bring forth the hoarded treasures which the lack of general confidence now consigns to sterility in private chests and in special bank deposites. Thus it was in 1819-'20. The commercial and bank catastrophe of that period took place in 1819; in less than a year afterwards, from the collapse of business and the stagnation of commerce, money in the Atlantic cities was abundant, idle, and seeking investment at four or five per cent. So says Mr. Cheves-so we can all remember. But to refresh memories, and establish this important fact, I will read a paragraph from Mr. Cheves's late letter to Dr. Cooper:

"Before the close of the first year of my administration, adequate capital had been assigned to the offices in which it had been deficient, and the bank and its offices generally, then or very soon after, were in a condition to do extensive business, had the situation of the country permitted it. But the commerce of the country became perfectly stagnant. Money was a drug. The bank, to keep up its business as far as possible, discounted long paper-say at four and six months, and perhaps longer. It was even proposed, with the same object, to lower the rate of interest