I

25th CONG....1st SESS.

SCU"

"For no one of these corporations will possess that absolue and almost unlimited domin of the United States whi on over the property of the ciuzens enables it at any mor ch the present bank holds, and winch Jent, at its own pleasure, to bring distress upon any portion e useful to its inte the community, whenever it may deem it .ests to make its power felt. Tue influence of each of the diate neigh ate banks is necessarily limited to its own immelocal b Dorhood, and they will be kept in check by the other nks. They will not, therefore, be tempted by the conasness of power to aspire to political influence, nor likely to terfere in the elections of the public servants. They will, moreover, be managed by persons who reside in the midst of the peoPe, who are to be immediately affected by their measures; and they cannot be insensible or indifferent to the opinions and peculiar interests of those by whom they are daily surrounded, and with whom they are constantly associated. These circumstanc s always furnish strong safeguards against an oppressive exercise of power, and forcibly recommend the employment of State banks in preference to a Bank of the United States, with its numerous and distant branches."

Mr. Taney did not in this or any of his reports hint at the propriety of adopting the sub-treasury

scheme.

NOMICAL,'

The present Secretary of the Treasury, in his supplementary report of December, 1834, discussed at length and with more than ordinary ability, the two systems of individual and bank agency. In relation to individual agency he came to the following conclusion: "Individual agents will probably be found less RESPONSIBLE, SAFE, CONVENIENT and EcoIn the same report the Secretary of the Treasury, referring to the possible contingency of the Government being compelled to resort to individual agencies, and that the Government could get on with these agencies, expressed his decided opinion, that these agencies should be avoided, if possible, and the bank system adopted. His opinion is thus expressed:

"After the charter shall expire, no difficulty is anticipated in having any of these duties, which may then remain, discharged by State banks. But, if any should occur, it will become necessary to devolve these duties on some responsible receiver or collector already in office, or on some safe agent, not now in office, as has been the practice for years in this country in paying pensions at convenient places, near which there was no State bank, or branch of the United States Bank; and, as has long been the usage in some countries in Europe, by having the public revenue in certain dis ricts chiefly received, kept, and trans mitted through private agents and brokers. This kind of personal agency, however, is, in the opinion of the undersigned, to be avoided, in all practicable and safe cases, under our present system of selected banks. Because it would render the system less convenient, less secure and more complex. if not more expensive. Hence it has not yet been resorted to.

"But, it was considered proper to mention this contingency, in order that its effect, if ever anticipated, may, beforehand, be duly weighed in the examination of the whole subject; and to add, that it this contingency be extended to the whole establishment of State Banks, as well as of the United States Bank, on the possibility they may all cease to exist, er may refuse to receive and manage the public deposites, (however improbable the occurrence of such an event may be) the fiscal operations of the Government could, undoubtedly, still proceed, through the personal agencies before mentioned. It is admitted, however, that it would be at some inconvenience and some increase of expense, unless remedied in a manner that may hereafter be developed, and would not, in the opinion of this department, and in the present condition of things, be so eligible a system as the present one. B cause banks, though exposed to some dangers and evils, and though not believed to be necessary for the fiscal purposes of any government, and much less one in the present happy financial situation of ours, are frankly acknowl edged to be in many respects a class of agents, economical, conyenient and useful.

In the same document he points ont, in forcible terms, the advantages of the State bank system. He says:

"1. in regut a the convenient situation of the selected banks, whether looking to the accommodation of the public of ficers, or of the public cre litors, it is believed to be fully equal to that of the United States Bank, and its branches. Some aks have been chose in places in which none were before employed, and in this respect facilities for deposites and paymts have been furnished nearer to some points, where onr collections and disbursements are very considerable. In this way, as it is now an established rule, long practised in most cases by this department, and revised and republished in 1827, to mike payments generally at the banks nearest to the residence of the public office or creditor to be paid, or to the place where his services were performe1; the payments under the present system have been made equally near and soetimes nearer than formerly. The departures from this usual course never occur without the consent, and indeed the request of the persons interested. So far as these departures may in any Cises be deemed favors to those persons, they were formerly granted on application to the department, under such circum stances as the public interests, on the assignment of satisfactory reasons, appeared to permit. The same course of indulgence is now pursued-it is that most convenient to the public in general as well as to the Treasury, and the only one, feasible under any 87stem, without incurring the unnecessary and inconvenient ⚫ expenses of furnishing funds enough, at every different poist of collection and disbursement to meet. not merely the ordinary and usual expenditures in the neighborhood of each point, but all the drafs which caprice, speculation, ora high rate of exchange might induce officers or creditors to draw on places greatly remote from their residence, or from the theatre of their public services.

42 The safety of the newly selected banks is the next subject of inquiry. The chief change in this respect, under the present system, has been in procuring the separate responsibility of several institutions for separate and smaller sums of money,instead of the single responsibility of one institution

a Very large sun; and in having the guarantee of State laws and State supervision over the conduct and solvency of these separate institutions, combined with the information and cog nizance of the department and Congress as to their condition and prospects, by means of their weekly returns, and other general sources of intelligence, instead of the guaranty of the acts of Congress and the supervision of the United States Gov. ernment over the single institution, formerly and chiefly employed

Considering these differences, coupled with the fact that the selected banks, without disparagement to others, are, or ought to be, chosen from the most flourishing and secure; that they may be changed, whenever any circumstance may indicate a change to be prudent, and that collateral security can be required whenever the deposite is so large as to seem to render it judicious; that the Government possesses advantages superior in case of their embarrassment, and that the whole capital stock must be lost before the deposite debt will become desperate; there certainly can be no very disadvantageous comparison, in theory, between the safety to the Government under the present rather than the former system.

"In practice, thus far, no loss whatever has been sustained by any of the newly selected banks, nor does any particular reason exist for anticipating a loss. It is due to them to remark, without derogating from the reputation, of other banking institutions, whose condition is less accurately known to the department, that the weekly returns of the selected banks show all of them to be in a secure, and most of them to be in a very flourishing condition, and that the whole of them united, on the 1st of July last, possessed specie in proportion to their notes in circulation, greater than did the Bank of the United States or the Bank of England, on the 1st of July last; and that their immediate available means to meet all the immediate demands upon them, including the whole of their large public and private deposites, have since been constantly improving, and are quite equal to those of most banking institutions in existence, and to what is required by the most approved banking principles."

In his annual report of the 8th of December, 1835, he expresses himself in the following terms: "The department take pleasure in stating that the public money continues to be collected and deposit. ed, under the present system of selected banks, with great ease and economy in all cases, and with greater in some than at any former period. The transfers of it to every quarter of the country, where it is needed for disbursement, have never been effected with more promptitude, and have been made entirely free of expense to the Treasury." In his annual report of December last, speaking on the same subject, he says: "The money in the Treasury has been safely kept during the year 1836. Until July last, as during the two previous years, it was placed in the State banks, selected according to the discretion of this department, on account of their high standing and favorable position for fiscal purposes, and regulated in a manner considered most secure to the Treasury, and convenient to the community as well as useful to all concerned. It is a source of high gratification to be able to add, that while so selected and employed, not a single dollar was lost to the Government by any of them, nor a single failure occurred to transmit promptly, and pay out satisfactorily, the public money intrusted to their care." ** "Nor is it believed, that the domestic exchanges of the country were ever lower or more regular than during that period."

These assurances in favor of the State bank system were made to the country near the close of the late administration, and in the last annual communications of its high functionaries, after the practical effects of more than three years experience had tested their truth, which gives as much force to the opinions expressed as can be imparted.

This is not all.-The Committee of Ways and Means, during the session of 1834-5, consisting of Messrs. Polk, (now speaker) Wilde, Cambreleng, Gorham, McKim, Binney, Loyall, McKinley, and Hubbard, six of them decided friends of the administration, in their report upon this very subject, evidenced their decided preference for the State bank system in the 2d and 3d resolutions which they reported.

"24. Resolved. That the public deposites ought not to be restored to the Bank of the United States."

"3. Resolved. That the State banks ought to be continued as the place of deposite of the public moneys; and that it is expedient for Congress to make further provisions by late, prescribing the mode of selection, the securities to be taken, and the manner and terms on which they are to be employed."

These resolutions were sustained by a very able, and, to my mind, unanswerable argument. It is true the committee did not enter into a comparison between this and the sub treasury system, v h ch has suddenly grown into such high favor, because then it had not merit enough to command the favorable consideration of the friends of the administration as was proved at the next session of Congress, by a unanimous vote, (save one,) when the scheme was presented by Mr. Gordon.

Mr. Benton, a Senator from Missouri, and distinguished friend of the late and present adininis

H. of Reps.

tration, in a speech delivered by him in the Senate of the United States on the 2d of June, 1834, on the subject of the restoration of the deposites to the Bank of the United States, ably vindicated the State bank system, and defended the State banks against the various attacks of the opposition. I here quote his remarks upon that occasion:

"Mr. BENTON proceeded to state several reasons, and to urge many considerations in favor of adopting it. He deprecated the spirit which seemed to have broken out against State banks, and said that it augured badly for the rights of the Stater. The strongest current of consolidation which was now observable in the Union, was that which sat in favor of the Federal bank and against the State banks, and threatened to consolidate all mo. neyed power, and with it all political power, in favor of a great central institution, independent of the States, and able, by its own avowal, to crush the State institutions at its pleasure. He said this spirit against the State banks was an impulsion of modern origin-unknown to the fathers of the republic, and to the early history of the country-and strongest now where the spirit of consolidation was strongest, and where the defence of States rights was weakest. At the commencement of this Federa! Government, said Mr. B., there was no federal bank, and all the public moneys were kept in State banks, or drawn di rect, as fast as they were received, out of the hands of receiv ers and collectors. General Hamilton, when Secretary of the Treasury, kept the public moneys, for the first year of his administration, in these banks, and kept them safely there. When the federal bank was proposed in 1791, and the keeping of the public moneys was one of the services attributed to it, Mr. Jefferson, then a member of President Washington's cabinet, denied the necessity of a federal bank for any such purpose, and openly declared himself in favor of the State banks. He said that these banks had already done this business for the Government, and done it well, and would no doubt enter into arrangements with the Treas ry for doing it permanently, and on better terms than it could be done by the federal bank. Mr. B. read an extract from Mr. Jefferson's cabinet opinion, delivered to General Washington at the creation of the first federal bank, to sustain what he said of his opinions. The extract was in these words:

"The existing banks will, without a doubt, enter into arrangements for lending their agency; and the more favorably, as there will be a competition among them for it; whereas, the bill delivers us up bound to the national bank, who are free to refuse all arrangement, but on their own terms, and the public are not free, on such refusal, to employ any other bank. That of Philadelphia, I believe, now does this business by their post notes, which, by an arrangement with the Treasury, are paid by any other State collector to whom they are presented. This expedient alone suffices to prevent the existence of that neces sity which may justify the assumption of a non-enumerated power as a means for carrying into effect an enumerated one. The thing may be done, and has been done, and well done, without this assumption; therefore, it does not stand in that degree of necessity, which can honestly justify it.'

Mr. B. said, that what Mr. Jefferson affirmed in 1791, waa afterwards proved under his own administration, and that of Mr. Madison. During the whole of their administrations, a large portion of the public moneys was kept in the State banks, and safely kept there. Mr. Gallatin, in answer to a call made by the House of Representatives, sometime before the expiration. of the charter of the first bank, showed that the public moneys were then kept in twenty different banks, of which nine were the United States Bank and its branches, and eleven were State banks! Mr. B. thought this point so material, that he would read an extract from Mr. Gallatin's report, to show that he neither overstated nor mistook the facts. He then read the names of the State banks employed by Mr. Gallatin, and the an ount of public money in each. They were the Bank of Columbia $115,192; the Bink of Alexandria, $61,917: the Bank of New port, Rhode Island, $35,788: the Bank of Pittsburg, $137,462; Roger Williams's Bank, $53,882; the Bank of Pennsylvania, $92.628: the Bank of Saco, $28,528; the Manhattan Bank, $185 670; the Bank of Maine, $50.747; the Marietta Bank, $19 601 and the Bank of Kentucky, 891,061.

"Such seid Mr. B., was the distribution of the deposites of the public moneys in the time of Mr Gallatin; more State banks employed than the whole number of branches and the mother Bank of the United States pu toge her! In several instances, a State bank was employed in the same place in which a branch of the Federal bank was situated, and some of those employed then are employed now. Of this class, Mr. B. instanced the Manhattan Bank of New York, and stated that the stock of this bank was, at this day, about twenty dollars in the hundred higher than the stock of the United States Bank! And this after all the efforts which ad been made to shake public confidence in the State banks, and especially those of New York. The Bank of Alexandria, which he said had lately stopped, with a small amount of public money in it, and the payment of which is secured, was also in the list of Mr. Galle tin's deposite banks, and had double as much money in it in his time. as when it lately stopped That bank had been a de posite bank for forty-five years, and the Government had 1 st nothing by it, notwithstanding the attempt lately made to delude the public with a belief that it had just been selected by Mr. Taney, and had immediately failed, with an immense loss to the United States.

"Mr. B. said, it was thus proved, by an experience of twenty years an experience running through the whole of the admin istrations of Jefferson and Madison, and a part of their prede cessors-that the public moneys may be safely kept in the State banks; and that Mr. Jefferson was right, in his cabinet opinion of 1791, when he gave it as his solemn opinion to President Washington, that there was no necessity for chartering a Federal bank to act as the fiscal agent of the Federal Treasury, and that the State banks would enter into arrangements for that purpose, aud do the business well!

"Mr. B said it was true that the Federal Government had since lost about a million and a half of dollars by State banks; but that loss took place in a season of universal embarrassment, growing out of a state of war and general stagnation of trade and commerce; a season which cannot be made the rule for judging State banks, without extending it to the Federal bank also; and then it would be fatal to that bank, for the United States lost about eleven millions of dollars in sustaining the present Federal bank in the same season of embarrassment, and saving that bank from sharing the general fate of the State institutions. This statement, Mr. B. said, was one of those facts which it was

25th CONG.....1st SESS.

good to prove; and, as the proof was in the documents of the benate, he would use it, and extinguish at once this delusive and deceptive comparison between State banks and the Federal banks."

Mr. Benton was sustained in his preference for the State banks by Mr. Wright, of New York. The present Speaker of the House, in a speech delivered by him on this subject, on the 20th of June, 1834, ably vindicated the State bank system, in the course of which he made the following remarks:

"The State banks, then, are to be employed, either under our law as it exists, or under the law as Congress may modify it. The bill before us proposes modifications, limiting and defining, with more precision than has heretofore been done, the execu tive discretion and power. It is tendered to the house, and especially to those who have raised the cry of a union in the President of the sword and the purse, when in fact he possesses neither. The present Executive does not desire, and never has desired, to retain any discretionary power in the execution of the laws, which, from its nature, is susceptible of being defined by law. The Executive, and his friends upon this floor who sustain him in the recent executive measure of the removal of the deposites, desire to see him, and not only him, but his successors in the executive office, relieved from the responsibility of exercising discretionary power in relation to the safe-keeping, management, and disburseinent of the public money, as far as, by legislative provisions, it can be done. The bill which has been presented, contains provisions suited, in the opinion of the committee who prepared and brought it forward, to attain this end. I have invited gentlemen who may think its provisions inadequate, or who may suppose that too much power is sull left in the hands of the Executive, to come forward with their modifications, still further limiting and confining his power. If they will neither accept this bill, nor propose to amend and make it more perfect, the conclusion must be, that they prefer the law as it is to any new legislative provision. If they do not co-operate with us in perfecting and pissing this bill, the conclusion will be irresistible that the charge which has been made against the President, of a desire to seize upon powers which do not belong to him, was designed to produce an erroneous impression upon the public mind, and is wholly unfounded in fact; that they prefer the existing laws to any amendments which can be made; and, in a word, that the real purpose to be effected by all the violent and impassioned appeals which have been made, charging him with usurpation, was to operate upon the public, with a view to procure a continuance of the present odious bank monopoly."

In a speech delivered by him on the 10th of February, 1835, he said:

"The State banks are not only competent to furnish all the domestic exchange required for the convenience of trade, but hey furnish it at cheaper rates, in many parts of the Union, han the Bank of the United States has heretofore done the same business."

In relation to the sub-treasury scheme, offered by Mr. Gordon, which seems to be the pioneer of the present, in the same speech, Mr. Polk said:

"Unless the States, and the United States, should both deem it proper, gradually, and in the end, entirely, to dispense with the paper system, and which result is not anticipated, the Government cannot escape occasional losses from that quarter, and can never hope to escape all losses from banks as fiscal agents, except by the employment, in their place, of other and individual agents, who will probably be found less responsible, safe, convenient, or economical.

He concedes that it would be practicable to employ such agents, but does not recommend it, for the reasons stated in the paragraphs of the report which I have read, and because it would not, in the present condition of things, be so eligible a system as the present one'

"A corporation may be safer than any individual agent, however responsible he may be, because it consists of an association of individuals who have thrown together their aggregate wealth, and who are bound, in their corporate character, to the extent of their whole capital stock, for the deposite. In addition to this, the Secretary of the Treasury may require as heavy collateral security, in addition to their capital paid in, from such a corporation, as he could from an individual collector or receiver, which makes the Government deposites safer in the hands of a bank than it could be with an individual.

"It may be well questioned whether the heaviest security which the most wealthy individual could give, could make the public deposite safe at the point of large collection. In the city of New York, half the revenue is collected. Several millions of the public money may be in the hands of a receiver at one time; and if he be corrupt, and shall engage in speculation or trade, and meet with a reverse of fortune, the loss sustained by Government would be inevitable. With ample security, as it was supposed, the Government lost a million or more in the tea case a few years ago. The losses in three cases alone, as already stated, in 1827 and 1823, when it was supposed ample care had been taken to secure the debt, amounted to near two millions. As, then, between the responsibility of a public receiver and bank corporations, as banks do exist, and are likely to exist, under State authority, the latter, upon the ground of safety to the public, are to be preferred.

"Banks, when they are safe, recommend themselves to the service of the Treasury for other reasons:

"1. The increased facility they possess over individual collectors or receivers, in making transfers of public money to distant points for disbursement, without charge to the public. Indeed, this is a service which individuals, to the extent of our large revenues, could not perform.

2. It may happen, in the fluctuation of the amount of rev. enue and expenditures, that there will be, at some times, a con. siderable surplus in the Treasury; which, though it may be temporary, if it be withdrawn from circulation, and placed in the strong box of a receiver, the amount of circulation will be injuriously disturbed, by hoarding the deposite, by which the value of every article of merchandise and property would be affected. So that, inasmuch as we cannot anticipate or estimate what the exact amount of revenue or expenditure may be from year to year, there may occur an excess of revenue in the Treasury, not immediately called for to be disbursed, which it would be very inconvenient to abstract from trade and circula

Making public officers depositories-Mr. Garland.

tion. Whilst the deposite is in a bank, the bank may use it, keeping itself at the same time ready to pay when deinanded, and it is not withdrawn from the general circulation, as so much money hoarded and withdrawn from the use of the community.

"If in the hands of receivers, they must either hoard it, by keeping it locked up in a strong box, or use it, at their own risk, in private speculation or trade; or they must, for their own security, or on their own responsibility, place it at last on deposite in banks for safe-keeping, until they are called on by the Gov. ernment for it.

"This temporary use of the money on deposite in a bank, constitutes the only compensation which the bank receives for the risk of keeping it, and for the service it performs. If receivers be employed, they cannot perform any other service than to keep the money, and must be paid a compensation from the Treasury."

These evidences, added to the fact, that upon the question of adopting the sub-treasury plan proposed by Mr. Gordon, every friend of the Administration, save one (Mr. Beale, of Virginia) voted against it, as did a majority of the opposition, I regard as conclusive of the preference of the late Administration for the State bank over any other system. It has been said that the friends of the Administration voted against this scheme with a view of trying the sufficiency of the State bank system, that is, to make an experiment; but General Jackson's, Mr. Woodbury's, Mr. Benton's, and Mr. Polk's assertions are at war with this imputation. Each of them attested that the State bank system had been well tried, and found amply sufficient for all the purposes of fiscal agency, domestic exchanges, and sound currency. I cannot believe that the friends of the Administration would thus have experimented upon such an important and delicate subject as the currency, when there was presented for their adoption a scheme so constitutional, so republican, so wise, and so efficient, as the Treasury scheme is now thought to be.

But, Mr. Chairman, I am not without further evidence from very high authority, although the President of the United States, in his message to this Congress, represents that this is the third fiscal connexion between the State banks and the Government which has failed, yet he certainly did not regard the two previous failures as constituting any serious objection to the system, for in August, 1836, preceding the last Presidential election, in a letter to the honorable Sherrod Williams, of Kentucky, he ably sustained the State bank system. In that letter he used the following language:

"Although I have always been opposed to the increase of banks, I would nevertheless pursue towards the existing institu tions a just and liberal course-protecting them in the rightful enjoyment of the principles which have been granted to them, and extending to them the good will of the community, so long as they discharge with fidelity the delicate and important public trusts with which they have been invested.”

These, Mr. Chairman, which have been afforded from the foundation of the Government to the present hour of the value of the State banks as fiscal agents, mainly offered by those who now seek to destroy that fiscal agency, and refuse their notes in the receipts of the public dues. This system, which was sound democracy in 1835, is bank rag aristocracy in 1837. While defending this system in 1835, I was a good democrat; but in 1837, for still defending the same system, I have become a bank aristocrat; from this it would seem that democratic principles, like deranged currency, is sowewhat fluctuating.

Mr. Chairman, experience, which is the most unerring of all human guides, one truth tested by which is worth a thousand theories, has taught us that credit is a plant of delicate character, and cannot, with safety, be rudely handled; it must be touched as cautiously as you would touch the sensitive plant. Often has the soundest credit, with the most ample, although not immediately available means, withered and sunk beneath the breath of unjust and unwarranted suspicion. No credit, and no credit system can be sustained without confidence-confidence in its very essence, and whenever withdrawn, whether justly or not, seriously affects it. The banking institutions of the country are sustained entirely by confidence, without it their notes would have no circulation, and they would not be able to conduct their business profitably. Want of confidence, then, or withdrawal of existing confidence, must, in the nature of things, greatly prejudice these institutions, and derange and embarrass their operations.

The recommendations of the President and the Secretary of the Treasury to discontinue the present deposite system, and the receipt of the notes of the banking institutions, is based upon the allega. tion that these institutions have been unfaithful to their high obligations, and therefore not worthy of

H. of Reps.

continued confidence. The present suspension of specie payments and its consequences, is the ground upon which this recommendation is founded. I propose, Mr. Chairman, briefly to examine whether the present condition of the banks, both as relates to their ability to meet all their liabilities, and the propriety of the suspension of specie paymen's, justty this charge, and the entire withdraw of public confidence. That the deposite banks will be able to redeem all their liabilities, and nat at no very distant period, is very manifest, not only from the report of the Secretary of the Treasury, but from their actual condition as ascertained and reported to this House. After the cautious and rigid scrutiny instituted into the condition of the State banks when they were about to be selected, I suppose it will not be doubted, that the selected banks were entirely responsible, and in high credit. I have selected eighteen of the principal banks in which the public money was deposited, and three others selected in 1835. The following comparison of their aggregate condition in relation to circulation and specie, when they were at first selected, and now, according to the last returns, proves most conclusively, that in relation to specie and circulation, their condition is materially improved.

Condition of eighteen of the principal banks when first selected, and up to August 15th, 1837, mcluding three of the principal selected banks under the acts of 1836.

Capital. Circulation. 830,725,670 $14,550,075

When first selected About Aug. 15th, last - 44,970,960 18,505,739 $14,245,290 83,955,664

Specie.

$3.825,298

5,457,556

$1,632,258

The circulation not quite three to one of specie. The annexed table shows their individual condition.

BANKS.

Merchant's, America,

Manhattan, Girard, Union, Metropolis,

Commonwealth, Boston,

$41,507

Boston New York

212,770

Mechanic's,

New York

264,040

New York

257,262

345,000 2,050,000

Phila phía

66,450

369,000 1,500,000

Baltimore

92,890

362,000 1,540,000

Washingt'n

17,050

105,400 500,000

Savannah

209,200

193,655 535,000

425,560

1,145,600 1,000,000

113.220

1,510,430 2,320,000

228,600円

Planter's,

Planter's,

State Bank, Ala., Mobile

Union,

Union, Commercial, Michigan,

Natchez

Farmer's & Mec., do. Bank of Virginia'

Charlestor.

Selected in 1835. Plant. & Mec. State Bank, State Bank,

BANKS.

Merchant's, America,

1,747,000 1,243,000

921,000 5,500,000 370,950

1,812,890

350,000

2,741,600

$3,825,298 $14,550,075 $30,725,670

15TH AUGUST, 1837.

Specie. Circu'tion. Capital

Commonwealth, Boston

Boston New York

163,080

211,270 1,500,000

613,930

43,200

417,200 2,000,000 426,660 2,050,000

5,000,000

209,370
230,700 777,470

75,710 237,610 1,845,560

44,420 364,920 500,000

1,855,230 2,300,000

293,550 260,140

535,400

138,600

303,230

1,521,760

4,205,000

Nashville

2,000,000

N. Orleans

80,580

1,305,470

N. Orleans

118.305

Detroit

81,850

$2,670

169,900

400,000

3,240,000

Farmer's, & Mec., do.
Bank of Virginia

Selected in 1835.
Charleston
N. Carolina
Indiana

Plant. & Mec.,
State Bank,
State Bink,

Comparison of exchanges.

$5,457,556 $18,505,739 844,920,960

In 1834, exchanges of the Bank of the U. S.. In 1836, by deposite banks

$225,617.910 420,463,211

All other liabilities and responsibilities are improved in nearly the same ratio. I refer to the last returns from the Treasury Department, and those officially published by the different and most important banks, to prove that there has been a general improvement in the condition of near

25th CONG....1st Sess.

ly all the banking institutions. I have before me an official statement of the condition of the banks of Virginia, exhibiting an improved, and improving condition, and entire solvency. I might refer to others, but time will not admit. The Treasury reports prove that, notwithstanding the suspension of specie payments, the deposite banks have rapidly reduced, and have nearly extinguished their debt to the Government. On the first day of January last, there was in the deposite banks to the credit of the Treasury, $42,468,859 97, of this sum there has been transferred and paid to the States, under the deposite act, $27,063,430 80, leaving a balance of $15,405,429 17; of that balance and of all the deposites made since, there now remains only the sum of $12,418,041 due to the Government, of this there only remains $8,166,492, 85 subject to draft, drafts having been issued for the remainder; and I do not doubt the amount is now much less. Of this amount, there is due less than $1,000,000 from the banks in the Atlantic States. Since the 1st of May, about the time specie payments were suspended, according to the report of the Secretary of the Treasury, the deposite banks have reduced their discounts $20,388,776, their circulation $4,991,791, their public deposites $15,607,316, while their specie has diminished less than $3,000,000. The Secretary further informs us that, "of the number of eighty-six banks employed at the time of the suspension, ten or eleven are supposed to have paid over all the public money, which was then in their possession, to the credit of the Trea

surer.

In the custody of more than half of the. others, an aggregate of less than $700,000 remains unadjusted. Several of the rest, still possess large suins; but many of them have continued promptly to furnish such payments from time to time, for meeting the public necessities." Mr. Chairman, these payments and these exertions afford, mosi conclusively, evidences of the frauds and insolvency of the local banks; would to God, all fraudulent and insolvent men would furnish a little more evidence of dishonesty and insolvency such as this, sir. The Secretary of the Treasury from his report, does not expect to lose a single dollar of the public money, so that the disconnexion recommended, cannot have any foundation on this ground. But, sir, the Treasury Department affords us another important fact, in its circular to the banks of the 3d of July last, upon the subject of the suspension of specie payments, and additional security for the public dues, he says:

"It affords me much gratification to find, so far as regards the inquiry concerning the payment and security, a great willingness expressed to make the United States aimply safe for the eventual payment of all that is due, and a streig convic tion entertained by the banks that no loss will be ultimately sustained by the Government."

Again he says:

“Another portion of that circular communicated informa tion concerning the lenient mode which, under the severe losses experienced by many of the banks from mercantile failures, and under the embarrassments to others, caused by panic and want of confidence, was contemplated to be adopted in recalling the public funds. That mode was by such moderate drafts and transfers as the public necessities should from time to time demand; and an earnest request having been made for a satisfactory compliance with it on the part of the banks, assurances have generally been given of a readiness to answer those calls with promptitude, and in an acceptable manner."

Again he says:

"The returns of the condition of the selected banks, which were requested to be continued, have generally been made with promptitude and regularity. But while it is very satisfactory to see, in most cases, a reduction in discounts and circulation, and which course is the most efficient to cure one of the existing evils in banking, and to enable the institutions which have suspended specie payments to resume them at an early day, and with much greater safety, it is regretted that, in a few instances, this course has not been adopted. But whenever departed from in such a crisis, the error has tended, and must tend hereafter, to impair the confidence of the department in the sound manage ment of the institution, and to justify such steps as may lead to a more speedy withdrawal of the public money, or to the procurement of increased security."

From these evidences, I take it for granted, that the deposite banks are solvent, and that the Government will not lose a single dollar by them.

This is not the only evidence afforded by the Secretary of the Treasury of the solvency of many of the deposite banks, and the reliance placed upon them to aid in redeeming the country from its present embarrassed condition. On the 13th of the present month, while the bill authorizing the issue of Treasury notes was depending, the Secre tary addressed the following letter to several of these institutions, proposing to them to purchase the Treasury notes which shall be authorized, and to pass the proceeds to the credit of the Treasury

as specie, to be paid as the wants of the Government may require; this is the letter :

}

"TREASURY DEPARTMENT. September 19th, 1837. "SIR: A bill is now before Congress to authorize the President of the United States to cause the issue of Treasury notes for such sum or sums as he may think expedient; but not exceeding, in the whole amount of notes issued, the sum of twelve millions of dollars, and of denominations of not less than one hundred dollars for any one note, to be reimbursed at the Treasury of the United States, after the expiration of one year from the dates of the said notes respectively.

“I will thank you to state whether, in the event of the pas sage of the bill, you will agree to take the said notes from the Government, and give the Treasurer of the United States a credit for the amount; to be drawn for as may be necessary, and payable in specie if required; and, if so, to state what amount you will receive, and the lowest rate of interest to be borne by said notes."

"I am, very respectfully,

"Your obedient servant,

"LEVI WOODBURY." Yes, sir, some of these faithless and unworthy institutions are appealed to, to purchase Treasury notes, and pass the proceeds to the credit of the Government, and hold it until it was wanting by the Government.

Judging from the generally admitted principle, that the soundness of a bank is to be determined by the proportion of its actual specie capital to its circulation, the deposite banks are sounder than the Bank of England, or the English Joint Stock banks. Up to the 25th July last, the relative proportion between the specie capital and its circulation was as follows:

United States Deposite banks

Circulation. 91,305,000 5,362,165 $96,667,165 Circulation.

- $11,429,012 $31,779,804 From this comparison it is manifest that the deposite banks in the United States, were in a condition better to sustain a sound currency and specie payments than the English banks, unless some other cause should operate a different effect. Yet, although the same causes which embarrassed the commerce and credit of the United States existed in England, the Bank of England continued specie payments, and the Bank of the United States suspended. Why? Four causes are manifest : 1. The Government of England continued their confidence in their institutions, ours withdrew its: 2. A large debt was due from the American to the foreign merchants, and a necessity for large specie exportations produced : 3. The continuance of the specie circular. 4. The execution of the deposite act of the 23d June, 1836.

From the connexion which existed between the Government and the State banks, growing out of their adoption as fiscal agents, and the general impression which it produced, that the Government was disposed to cherish and sustain them, the slightest manifestation of the want of confidence on the part of the Government, was calculated to produce the most disastrous effects upon their credit, and cripple their operations. It was calculated to impair general confidence, and produce a rush for specie, so sudden and violent, that but few banking institutions could be prepared to withstand it. want of confidence was clearly manifested in the Treasury circular of July, 1836, in which danger was distinctly announced to the country. This measure of itself, however, could not have exerted any very deleterious influence upon the credit of the banks; but, operating in conjunction with other causes, was calculated seriously to impair public confidence, and to produce serious embarrassments in the monetary system of the country.

This

H. of Reps.

professed objects of the order. The gold and silver thus drawn from the eastern, was deposited in the western banks, and there kept entirely unemployed, to the great detriment of trade, awaiting the drafts of the Government. In addition to the operation of the specie circular, and about the time of its utmost severity, the pressure of a heavy foreign debt created an additional heavy demand for specie, which was principally to be drawn from the vaults of the banks. The effect of this demand for specie to pay the foreign debt, necessarily produced a contraction of loans and circulation, corresponding with the extent of the demand. We all remember the gloomy period of 1819, when distress and ruin pervaded the whole community, and filled it with dismay, and as it is fair to judge of the present by the past, I have selected the four years preceding 1819, and the preceding four years, with a view to contrast the state of trade then, with its present state; in order, in part, to account for the present revulsion and derangement of commerce, and the effects now, as then, produced. In the years 1815, 1816, 1817 and 1818, the state of foreign trade was as follows:

Exports.

Imports. $113,041,274 147,103,000 99,250,000

1815

$52,557,753

1816

81,920,452

1817

82,671,569

1818

93,281,133

121,750,000

The excess of importations, Leaves a large foreign debt; and although the balance now is $37,000,000 less than in 1819, yet it is sufficiently large to render a heavy reduction in bank loans and circulation necessary to meet it; because exchanges, being materially reduced, it could be met in nothing but specie. The heavy importations of specie from England, through the instrumentality of acceptances of American drafts alarmed the Bank of England for its own safety; and to counteract this drain, it refused to discount for any merchant who accepted American bills, thus making it necessary to demand more specie for the payment of the foreign debt, than would otherwise have been required. This policy was more rigidly pursued than perhaps it otherwise would have been, had it not been supposed, from the declarations of a great portion of the American press, that it was a part of the policy of our Government to prevent the exportation of specie entirely, and continue, as far as possible, the drain from Europe. Combined with these causes, was the execution of the deposite act of June, 1836.

It having been ascertained from the rapid increase of the revenue from the sales of the public lands, and the duties on foreign importations, that there would be a large surplus in the Treasury on the 1st of January, 1837, it was determined to withdraw it from the control of the Federal Government, (to which its possession offered so many strong and dangerous temptations,) and from the custody of the deposite banks, to prevent its being made the foundation of dangerous and excessive issues of bank paper; and to place it in the custody of the State Governments, thus to remain to be employed for the local benefit of the people, (from where it had been unconstitutionally and improperly drawn,) until needed for the legitimate purposes of the Government, a disposition, in my humble opinion, both wise and salutary, both as regards the currency and the purity of the Government. For the purposes of giving the banks timely notice, and to enable them to meet the demands of this law without detriment to themselves or the public, the operation of the act

25th CONG....1st SESS.

was not to commence until the 1st day of January atfer its passage, a period of six months, and then to be met in four equal quarterly instalments. This was ample time to prevent any serious derangement of the affairs of the banks, or the commerce of the country. In a short time after the passage of this act, and long before it was ascertained what would be the amount to be distributed, and of course the first instalment, the Secretary of the Treasury issued his orders to the deposite banks, directing them, by a fixed period, to transfer to specified points, about $13,000,000, (as well as I recollect,) instead of giving drafts to the States for their several quotas on the most convenient banks to pay the amount on the day it was due; which might have been met, according to the usual mode of commercial exchange, between creditor and debtor banks, and merchants; and by which they would have been performing but the usual commercial functions; whereas, by the operation of the orders of the Treasury Department, the amount to be transferred was abstracted from commercial employment, from the time of the transfer till the payment; and created a demand, in some instances, for specie, which might have been avoided. Thus was inflicted upon commerce an injury from the injudicious execution of the law, which is dexterously ascribed to the provisions of the law itself! This operation was particularly severe upon the New York banks, which held in the neighborhood of $20,000,000 of the public deposites. The deposite act in itself did not necessarily decrease, or tend to decrease, the active capital of the country; it was taken from banks to be again put into banks. While it reduced the active means of some, it increased that of others. In many instances the credit was only passed from the Federal to the State Governments. There was nothing in it to embarrass the trade and commerce of the country. The effect was produced by its unwise execution, coming in aid of other causes of an embarrassing character. In this opinion I am sustained by the most able and skilful financiers of the country.

At about the time of the suspension of specie payments, there were in the banks, (if my estimate be correct,) about $155,000,000 of private deposites. These private deposites were generally made in bank notes; yet the depositors had the right to demand specie for them. When the operation of these causes were perceived, and the diminution of confidence on the part of the Government manifest, the private depositors, in place of their deposited notes, began to demand specie. Brokers also began to demand specie for all the notes which they held, or could purchase, and this was no small amount.

The banks in the city of New York, where the storm first began to rage and to produce most serious effects, although ultimately responsible for all their obligations, could not meet this sudden rush upon their vaults, without ruin to themselves, and the people; they therefore suspended specie payments. This suspension, the causes of which were not understood by the country, produced alarm throughout the whole community; and a general suspension of specie payments was the result. By this suspension I do not doubt that the banks have not only saved themselves but the country from utter ruin and destruction. I confidently believe that the withdrawal of the confidence of the Government, so strengthened the operation of all the causes to which I have adverted, that it compelled the banks to a course, which, with the fostering care and continued confidence of the Government, could and would have been avoided: for the banks have no interest, whatever, to embarrass their own operations by an act so destructive of that credit which is so necessary to the successful extension of their business-for sound unsuspected credit is the very soul of their operations, and the foundation of their profits.

The truth of this argument is fully sustained by recurrence to the history of the Bank of England, as well as our own banking institutions. On many occasions the Bank of England has been sorely pressed, yet it retained the confidence, and was aided by the Government, and was enabled thereby to surmount its embarrassment, and recover from its dif ficulties. In 1793, particularly, its operations were so embarrassed, and the rush for specie so great, that it was compelled to suspend specie payments; and continued the suspension, without intermission, from that time till 1829; many of the causes, which produced the suspension, continuing to exist during whole time. In this state of embarrassment, its course was justified by the British Government, whose confidence, and that of the mercantile com

Making public officers depositories-Mr. Garland.

munity continued, and its suspension was legalized, until finally, by a prudential course of measures, adopted to its true condition, it triumphed over all difficulties; and, in 1829, resumed specie payments, which it still continues. The confidence of the Government and merchants enabled the bank thus to suslain itself; to maintain its solvency and its credit; and to perform, with success, its commercial and fiscal duties.

In 1815, the State banks from the operation of many causes, suspended specie payments, yet the confidence of the Government was not withdrawn. Mr. Dallas and Mr. Cawford, both able and patriotic men, as Secretaries of the Treasury, having sustained their credit by all the means in their power. Mr. Crawford, particularly, made large deposites of public money in many of them, and thereby enabled them to indulge the people, maintain their own credit, redeem their debt to the pub. lic, and finally, in 1817, to resume specie payment. I believe if the same benevolent and patriotic policy had been pursued towards the State banks, at the present period, the existing suspension would not have continued to this time, if it had taken place at all. Mr. Dallas nor Mr. Crawford, however, had not conceived the idea of a total separation between the Government and the banking institutions of the country as fiscal agents; and, therefore, felt some inducement to sustain and preserve them; but a different feeling seems to prevail with the present Secretary of the Treasury, who can only expect to succeed in his views by the embarrassments and difficulties of the banks. While I do not ascribe to him any design to produce the embarrassment which has overtaken the banks, and, with them, the commerce of the country, yet I am well satisfied that he has withheld from them that confidence, which might justly have been extended; and which would, before this, have redeemed them from their embarrassing difficulties, and have afforded salutary relief to the people, and the commerce of the country.

The charge made by the President, and those who now favor a total separation between the fiscal operations of the Government and the banks, "that they have been guilty of an excessive issue and circulation of their paper," is true-lameatably true. Yet I cannot perceive in all the facts and circumstances, connected with the charge, that they have been actuated by any improper or impure motives. These institutions are conducted by men who are liable to be misled by the same impulses which betray the most prudent and the most cautious of mankind into occasional error. A spirit of speculation had extensively spread itself throughout the country; acted and re-acted from the people to the banks, and from the banks to the people, until all, absorbed by brilliant prospects of immeasurable wealth, were beyond the bounds of prudence and discretion; and ruin, to many, has been the penalty. These impulses have occasionally produced like effects through all periods, and resulted in like catastrophes, whether their currency was exclusively metallic or

not.

All these evils carry with them, however, sure antidotes. The current of money has its level; and whenever it exceeds that level, the redundancy runs off, and leaves the current at its proper level. In its reduction, serious and distressing injury is often inflicted; yet the return is gradual and sure. But a question arises, whether the banks are entirely in fault in this matter? Is not the Government itself much in fault? And shall the banks be compelled to take the whole responsibility for an error in which the Government has largely participated? At the time the public deposites were removed from the Bank of the United States, the then Secretary of the Treasury, acting under the impression, that the charter of the Bank of the United States was not to be renewed, and that its extensive circulation and discounts were to be called in, in order that no shock to the business of the country might be sustained, urged upon the State banks, in the following note, the duty which would devolve upon them to supply the vacuum which would be created by this withdrawal, growing out of their fiscal connexion with the Government. This the banks attempted to, and gradually increased their accommodations and enlarged their circulation. He

says:

TREASURY DEPARTMENT, September 26, 1833. STR The Girard Bank has been selected by this department as the depository of the public money collected in Philadelphia and its vicinity, and the collector at Philadelphia, will hand to you the form of a contract proposed to be executed, with a copy of his instructions from this department.

H. of Reps.

In selecting your institution as one of the fiscal agents of the Government, I not only rely on its solidity and established character, as affording a sufficient guarantee for the safety of the public money intrusted to its keeping, but I confide, also, in its disposition to adopt the most liberal course which circumstances will admit towards our moneyed institutions generally, and particularly to those in the city of Philadelphia.

The deposites of the public money will enable you to afford increased facilities to commerce, and to extend your accommo dation to individuals. And as the duties which are payable to the Government arises from the business and enterprise of the merchants engaged in foreign trade, it is but reasonable that they should be preferred, in the additional accommodation which the public deposites will enable your institution to give, whenever it can be done without injustice to the claims of other classes of the community.

I am, very respectfully, your ob't servant,

R. B. TANEY, Secretary of the Treasury. TO THE PRESIDENT OF THE GIRARD BANK, PHILADELPHIA. This recommendation was repeated by the late President in his succeeding annual message. By the deposite aet of June, 1836, for proportions of the public money beyond a specific amount, the deposite banks were required to pay interest, which made it a principle of self-defence, that they should extend their loans and increase their circulation; because it was not to be expected that they would lock up, and keep unemployed, the public money, on which they were bound to pay interest! These two causes combined certainly produced an excess in the bank discounts and circulation of the country. This excess has been increased by another cause, which Mr. Taney nor Congress did not, or could not, have anticipated. The vacuum which was anticipated by the refusal to renew the charter of the Bank of the United States, was never produced; for, contrary to all expectation, the capital and stockholders of that bank were subsequently incorporated by the State of Pennsylvania, which continued in circulation its notes, and prevented any material diminution in its discounts.

I appeal, then, to the good sense of this house to say, whether the excessive issues complained of, have not been produced by causes, calculated in their very nature to mislead, and produce the excess complained of, without the slightest imputation of fraud or corruption against the banks?

Mr. Chairman, the connexion which now exists between the finances of the Government and the deposite banks, was produced by the solicitations of the Government itself. The Government found itself engaged in a severe and dubious conflict with the Bank of the United States, which it had determined to overthrow. To do this, it was necessary so to conduct its operations, that the commerce and business of the country might not be materially shocked, and the sensibilities of the people excited. To effect this, it sought the aid, and procured the operation, of the late deposite banks, without whose aid and co-operation, I have no hesitation in believing, the Bank of the United States would have triumphed. Yes, sir, I believe that it would have successfully resisted even Andrew Jackson, with all his popularity, his acknowledged firmness and courage. The Stute banks came to the aid of the Government, and the Government triumphed. For this they incurred the undying hostility of the Bank of the United States, which still pursues them. They incurred the denunciations and prophecies of evils of the opposition, who opened upon them all their batteries. This they withstood; but in the hour of victory, which they so signally contributed to achieve, in the very first hour of their difficulties and perils, the, very friends whom they rescued from defeat, have taken possession of the batteries of the enemy, and now pour thick vollies upon their devoted heads! Is this generous? Is it magnanimous? Is it liberal? I leave you, sir, to give the answer. I leave you to determine whether, for causes which makes the act not only excusable, but justifiable, these institutions are to be utterly annihilated for their late suspension of specie payments, when they have, upon trying occasions, afforded seasonable relief to the country, and are entirely solvent.

That the State banks are susceptible of such regulations as will secure to the country a sound curI do not doubt; for this is clearly proved by rency, experience; and that the revenue of this Government may be so employed as to be a most potent engine in the accomplishment of such a desirable object, by the force with which either their hopes or their fears may be addressed, cannot be reasonably doubted. In 1816, when specie payments were suspended, and the evils of a redundant and deranged currency afflicted the country much more severely than now, Mr. Webster, in a speech delivered in this house on 30th April, 1816, expressed himself thus: "That if these banks, (meaning the State banks,) what engine, he asked, was Congress to use for the remedying the existing evil? Their only legitimate

25th CONG....1st SESS.

power, he said, was to interdict the paper of such banks as do not pay specie from being received at the custom-house. With a receipt of forty millions a year, he said, if the Government were faithful to itself and the interests of the people, they could control the evil, and it was their duty to make the effort. They should have made it long ago, and they ought now to make it; the evil grows worse by indulgence. If Congress did not now make a stand, and stop the current whilst they might, would they when the current grew stronger and stronger, hereafter do it? If this Congress should adjourn without attempting a remedy, he said, it would desert its duty."

If then, how much more potently could Congress now operate with the enlarged revenues of the Government? Yet Mr. Webster did not hold over the heads of the banks the terrors of a final and eternal separation. Mr. Biddle, the President of the Bank of the United States, in his triennial report to the stockholders, in 1831, says: "And they (the Bank of the United States and branches,) received freely the notes of solvent State banks, with whom periodical and convenient, but certain, settlements of accounts were inade."

"By receiving freely the notes of the State banks, within convenient reach of the bank and its branches, and by frequent settlements with them, these institutions are kept in the habitual presence of an accountability, which naturally induces them so to apportion their issues to their means as to secure the soundness of the currency."

I do not doubt the soundness of an opinion, so thoroughly demonstrated by the practice which fell under the observation of him who expressed it; and I do not doubt that the Government, in the employment of its revenues, and the observance of the same rules, may, through the instrumentality of the State institutions, preserve a sound currency, with much more success than the United States Bank did. Frequent periodical, and certain settlements are the efficient instruments by which excessive issues may be avoided, and sound currency preserved.

Mr. Chairman, if existing laws, which prohibit the continuance of any deposite bank as a fiscal agent of the Government, and the refusal of their notes in payment of the public revenue, had not sufficient terror to prevent the suspension of specie payment, how much more efficacious do you suppose the adoption of this measure, as the permanent law of the land, will be in restoring specie payments-so much to be desired, and so necessary to the prosperity and tranquillity of the country? Sir, it will not only not hasten, but greatly prolong that important event. During the suspension of 1816, Mr. Dallas, then Secretary of the Treasury, in his annual report to Congress of the 3d of December, 1816, expressing his opinion upon this identical subject, and the propriety of exercising the power of such restriction, said: "The successive attempts made by this department to relieve the administration of the finances from its embarrassments, have been ineffectual. There was no magic in a mere Treasury instruction to the collectors of the reve nue, which could by its virtue, charm gold and silver into circulation. THE PEOPLE, INDIVIDUALLY, DID NOT POSSESS A METALLIC MEDIUM, and could not be expected to procure it throughout the country, as well as in cities, by any exertion unaided by the banks. And the banks, too timid, or too interested, declined every overture to a co-operation for reinstating the lawful currency. In this state of things, the Treasury, nay the legislature, remained passive. The power of coercing the banks was limited to the rejection of their notes in the payments of dues and taxes, and to the exclusion of their agency in the custody and distribution of the revenue; but the exercise of that power could not GENERATE A COIN CURRENCY, although it would certainly ACT OPPRESSIVELY UPON THE PEOPLE, and put at hazard every sum of money which was due to the Government. Until, therefore, a substitute was proposed for the paper of the bank, it would have been a measure of IMPOLITIC and useless SEVERITY towards the community to insist, that all contributions to the expenses of the Government, should be paid in a medium, which, it is repeated, the community DID NOT POSSESS, and COULD NOT PROCURE."

In addition to these strong views of Mr. Dallas which apply with irresistible force to the present state of things, I add those of the able, the patriotic and practised statesman, William H. Crawford, who succeeded him in the office of Secretary of the Treasury. In a letter dated Nov. 29, 1816, addressed to Wm. Jones, then President of the Bank of the United States, he says:

A gain-he says:

"How far the discrediting of their paper, by refusing to receive it in discharge of dues and tures, will influence their conduct, can only be ascertained by the EXPERIMENT.'

These views of these two able and distinguished men, expressed in the midst of a pressure more severe and infinitely more alarming than the present, are entitled to the greatest weight. It was then, so it may now be truly said, that this bill will not legislate a coin currency into existence, nor put gold and silver into the pockets of the people! Its only effect will be to prolong the resumption of specie payments; reduce and depreciate the already reduced currency of the country, and ruin and oppress the people. Sir, if you would secure the resumption of specie payments within a short time, instead of crippling, you must encourage and support the banks in their exertions to resume, which we have good reason to believe they are honestly exerting themselves to do. They now only need a little further reduction of the foreign debt, (which presses on them so severely, but which is rapidly being reduced,) and the restoration of the confidence of the Government, to resume specie payments. This I do not doubt they will be able to do by the 1st of April. Let us only imitate the examples, and practise the lessons of Crawford and Dallas, and all will be well; confidence will be restored and commerce resume its usual activity. Even if the scheme proposed by the committee of Ways and Means were wise and practicable, it cannot be carried into execution at this time, without ruin to the whole mercantile community. Until the vaults of the banks are unlocked by the resumption of specie payments, specie in sufficient quantities cannot be procured. The attempt to enforce this law in the present state of the metallic currency, would produce unparalleled distress. The maximum exchanges of the United States Bank in 1832, amounted to $254,000,000; that of the State Banks in 1836 to $324,000,000 which proves the capacity of the State Banks, to conduct the exchanges of the country, beyond doubt. From the foregoing considerations I conclude that there is no reason for discontinuing the State banks as fiscal agents of the Government, that did not equally exist against their employment.

Notwithstanding the fact, that the States, from the foundation of the Government, have chartered, and continue to charter banking institutions, and this Government has been in the uniform practice of employing them as fiseal agents, it is now gravely contended by some that institutions are unconstitutional. The argument is derived from the constitutional prohibition upon the States to emit "bills of credit." If the States had made the notes of the banks which they have incorporated, a legal tender, then the argument would have been good; but so long as they are not made a legal tender, and every man is at liberty to receive them or not, at his pleasure, then the prohibition of the constitution does not apply. I need not detain the committee by any argument of mine. This question was determined directly by the Supreme Court of the United States, at its last session-a democratic Supreme Court, of which Roger B. Taney is Chief Justice. I will simply refer to the able, lucid, and unanswerable arguments of the judge, the opinion of the court, in the case of Briscoe vs. the Commonwealth of Kentucky. But it is contended by some that it is equally unconstitutional to employ State banks as fiscal agents, as to charter a national bank. I cannot see the force of this very recent objection; there is a material difference between creating an

H. of Reps.

institution which is not authorized by the constitution, and entering into compacts with corporations which are created by governments, having the constitutional power to create them, and imparting to them the express power of contracting. I do not perceive that, because the Government of the United States cannot, by authority of the constitution, incorporate a national bank, that it therefore cannot enter into a contract with individuals, which it is daily in the habit of doing. The State banks, being constitutionally incorporated and having the power to contract, stand to the Government precisely in the same relation as individuals, who have the power, and may contract with the Government. Sir, I have been much surprised to hear an argument so fallacious, so gravely, and so earnestly urged.

I will now, Mr. Chairman, call the attention of the Committee to the scheme presented to the consideration of Congress by the Executive, and offer to its consideration as briefly as I can, my objections to it.

The first objection is, that it will be trying an experiment, to say the least of it, of very doubtful results. My friend from Virginia, (Mr. Jones,) in a very able speech a few days past, seeins to justify embarking on this experiment, as he admits it to be, on the ground that the Government itself is but an experiment. It is true that our system of Government, when it was entered upon, was but an experiment, yet it was a necessary one, and in its progress has developed the wisdom of its adoption. But surely my friend would not argue that because the system was originally an experiment, that it would be prudent to abandon that part of the system which has worked well, and adopt one which has no practical result to recommend it. I regard it as the part of wisdom to adhere to every system which experience has taught to be wise and salutary. I am sure my honorable friend would not be willing to surrender our admirable system of government and adopt another which had nothing more to recommend it than that it was an experiment. system of bank deposites has been tried, and, although there have occasionally been some disorder and derangement, as there has been in all human affairs, has generally worked well-so far as the experiment now proposed has had any practice, it has been unsuccessful, and proved its utter insufficiency.

The

The second objection which I present is, that the public money will be unsafe and its effects demoralizing. The safety of the public funds is an important matter, and should enter deeply into the consideration of Congress in the adoption of any system which may be proposed. We all know that there is no system which human ingenuity and sagacity can devise, that would be entirely safe. Yet reason and experience teach us that there are some more safe than others, and that which reason and experience teaches to be the most safe, should be adopted. In view of this question of greater safety, let the present and the system proposed be contrasted. Place, if you please, the estate of any individual who might be selected as the depositor and keeper of the public money, by the side of the capital of any bank which would, in the exercise of a sound discretion, be selected, and how vast the difference in favor of the bank-compare the inducement which the bank has to preserve its good faith and credit, in a mere pecuniary point of view, with that of an individual, and how great the disparity in favor of the bank-compare the force of the moral obligation on the part of the bank with that of the individual, all the officers of the bank, the directors and the stockholders are deeply interested in preserving its faith with the Government and all other depositors. Under the proposed system a single individual is interested-contrast, if you please, the means of detecting fraud, peculation, and defalcation. In the banks the officers are in daily watch and check upon each other. The directory hold weekly sessions and superintend the officers, and the stockholders hold annual meetings and examine and scrutinize into the conduct and management of the whole-as to the individual depositor, there would be only the Secretary of the Treasury, who, residing at the seat of Government, would have but little opportunity to detect defalcation and other malversations. But it is urged by the President that ample security may be taken which will remove all these objections. Sir, whatever collateral security you can take of individuals, you can also take of the banks, which leaves the question of safety still decidedly in favor of the banks, the