the sound republicanism of James Wilson, of Penn-
sylvania, and Mr. Madison. To the former gentle-
man, more than to any other member of that body,
are we indebted for the admirable checks and bal-
ances which characterize that celebrated compact.
The impress of his sound, enlightened, and truly
republican mind, can be found in every line.
"When the vote was taken to strike out the words
k - and emit bills of credit" from the draft of the Con-
stitution which had been submitted for the conside-
ration of the Convention, the result was conclusive,
nine States voting in the affirmative, and two only
in the negative.*
The vote of New- York was not cast by Mr.
Hamilton, but it can be easily conceived, it" we may
form an opinion from the policy which he subse-
quently advocated, thai the vote of New-York, if
given at all, would have been in the negative. The
errors which he committed as a statesman were, by
Madison Papers, revised by Jonathan Elliot, p. 435.
POLK ADMINISTEATION. 377
inculcating the doctrine that the masses should be
controlled by political machines, and when that
could not be done by conforming to the plain re-
quirements of the Constitution, in resorting to a lati-
tudinarian construction of that instrument, to accom-
plish his views. As an illustration of this state-
ment, it is only necessary to examine his construc-
tion of the Act of July 31st, 1789* The language
of that bill was positive, and provided that the du-
ties should be received in gold and silver coin only,f
* This section (the 30th of the Act of 1789) provides for the receipt
of the duties in gold and silver coin only. The Secretary has considered
this provision as having for its object, the exclusion of payments in the
paper emissions of the particular States, and the securing the immediate
or ultimate collection of the duties in specie, as intended to prohibit to in-
dividuals the right of paying in any thing except gold and silver coin ; but
not to hinder the Treasury from making such arrangements as its exigen-
cies, the speedy command of the public resources, and the convenience of
the community might dictate ; these arrangements being compatible with
the eventual receipt of the duties in specie. For instance, the Secretary
did not imagine that the provision ought to be so understood as to prevent,
if necessary, an anticipation of the duties by treasury drafts receivable at
the several custom-houses. And, if it ought not to be understood in this
sense, it appeared to him that the principle of a different construction
would extend to the permitting the receipt of the notes of public banks,
issued on a specie fund. ****** Such were the reflections
of the Secretary with regard to the authority to permit bank notes to be
taken in payment of the duties. The expediency of doing it appeared to
him to be still less questionable. The extension of their circulation by
the measure is calculated to increase both the ability and the inclination
of the banks to aid the Government. It also accelerates the command of
the product of the revenues for the public service, and it facilitates the
payment of the duties," &c. — Report of Mr. Hamilton to Congress.
f " Sec. 30. And be it further enacted, That the duties and fees to
be collected by virtue of this act, shall be received in gold and silver coin
only, at the following rates, that is to say, the gold coins of France, Eng-
land, Spain and Portugal, and all other gold coin of equal fineness, at
eighty-nine cents for every pennyweight. The Mexican dollar at one
hundred cents ; the crown of France at one dollar and eleven cents ; the
378 niSTOEY OF TIIE
and proceeded to regulate the value of foreign coin
which might be paid into the treasury for the pub-
lic dues. It was not within the scope of the Eug-
lish language to make the clause more definite, and
yet Mr. Hamilton construed it to mean the exclusion
of the paper emissions of particular States, but as
not preventing him from anticipating the duties by
treasury drafts, receivable at the several custom-
houses. If that course was justifiable, he argued
that the principle would authorize the receipt of the
note- of public banks, issued on a specie fund.
The history of our country does not furnish an in-
stance of a bolder violation of a law of the land, than
the course pursued by Mr. Hamilton. The Congress
to whom the report was made numbered but a few
republican members, and the federalists received it
without a word of dissent. It was the same Con-
gress that chartered the first bank of the United
States, and those persons who could establish an in-
stitution of that kind, with English stockholders to
plunder the people by making use of the credit and
revenues of the country, would not be likely to cen-
sure the loose construction placed upon a law, by
one whom they held in such high estimation as
Alexander Hamilton. The fatal precedent was es-
tablished from which have flowed the most disas-
trous consequences.
More that fifty years elapsed, and still the Gov-
ernment was not separated from banking institu-
crown of England at one dollar and eleven cents ; and all silver coins of
equal fineness at one dollar and eleven cents per ounce."— Act of 1789,
/. and Broum, vol. 1, p. 45.
POLK ADMINISTEATION. 379
tions, and that which had excited the disgust
of all under the articles of confederation, had, in
1836, acquired a power and influence which over-
come all opposition. In 1836, Mr. Benton intro-
duced a bill into the Senate to re-establish the cur-
rency for the Federal Government, and although its
provisions did not go to the extent of the constitu-
tional treasury bill, .which was enacted ten years
after, still the only supporter it had in that body
was its author. To save his feelings from being
wounded by a regular vote upon it, Mr. Buchanan
urged him to consent to have it laid upon the table.
Mr. Wright, another friend, made the motion, and
although a disposition was manifested to reject the
bill by a decisive vote, they, nevertheless, suffered
it to go quietly to the table*
It is a subject of painful interest to contemplate
the years of gloom and disaster, which followed the
surrender of the funds of the Government to paper
institutions. The Bank of the United States, with
its power to control legislation, and to produce
financial ruin and embarrassment, took the lead.
Its example was followed, in a more humble way,
by the institutions created in the several States.
To create a vacuum to be supplied by their own
notes, specie was exported from the country. A
premium was obtained by this operation which re-
sulted in a more extensive circulation of its repre-
sentative. Members of Congress, who should have
re-established the only constitutional currency, were
* Speech of Mr. Benton, January 16th, 1840. Appendix to the Con-
gressional Globe, 1st session 26th Congress, p. 117.
380 HISTORY OF THE
in many instances indebted to the bank, and they
obeyed more obsequiously the behests of that in-
stitution than the will of their constituents. The con-
trol which chartered monopolies had obtained over
the destinies of the country was truly alarming', and
their power was exercised with a reckless and un-
scrupulous disregard of the public weal. A vast
amount of paper money was issued, carrying with
it an extension of credit, which elevated all kinds
of property to an unnatural price, followed by con-
tractions which carried distress into every part of
the country. Suits were instituted against the
debtor, property was sacrificed, and the capitalist
would purchase it at reduced rates. Another ex-
pansion of the currency would enable them to sell
what they had purchased, and the people would
hail, as a blessing graciously bestowed by the 1 >anks,
that which had the effect of plundering them of
the fruits of honest industry. The first bank com-
pleted its career, and when the inflexible integrity
and iron will of General Jackson enabled him to
make a successful stand against the second monster,
its friends and supporters raised a political excite-
ment which has seldom had its parallel in the his-
tory of our country. It was not to be supposed
lli.it those who had rioted upon the misfortunes of
others would yield their privileges without a strug-
gle, and the fierceness which signalized that memo-
rable struggle, illustrated the power which was pos-
sessed by the capital of the country. The friends
of* reform triumphed, and a bank of the United
States has become an "obsolete idea."
POLK ADMINISTRATION. 381
The capital which had been invested in that in-
stitution was transferred to State banks. Those
persons who had for so long a period the custody
and use of the public money, were not disposed to
yield the benefits which resulted from it, and the
divorce of bank and State was resisted with the
same obstinacy as ever. The friends of reform
numbered in their ranks men who had the ability
and the inflexibility of purpose requisite to main-
tain their views. To Mr. Benton the country is
under lasting obligations for the stand which he
assumed upon this question, when, "solitary and
alone," he withstood the power of wealth and cor-
ruption, and amidst gloom and defeat, steadily ad-
hered to the principles of the constitution. The
representatives who were elected by the people to
sustain him in the struggle, found their principles
melting away before the influences which the banks
employed in the contest. The evil was hard to
eradicate. The influences of paper money had be-
come fastened like a cancer upon the body poli-
tic, and a removal threatened its destruction. The
crash among the banks, in the spring of 1837, car-
ried terror and dismay into the ranks of the demo-
cratic party. Men who had hitherto proved inflex-
ible, surrendered their positions, and many of those
who adhered steadfastly to their principles, were
carried down the stream which threatened to un-
dermine the very pillars of the constitution. Slowly
the country emerged from the storm which swept
over it. The Independent Treasury bill, which was
passed on the 4th of July, 1840, was destined, how-
.">.V2 HISTORY OF THE
ever, to a brief existence. The odium with which the
whig party managed to surround it, produced its
repeal during the extra session of Congress, in 1841.
The admirable manner with which its provisions
met the expectations of its friends, during the
thirteen months it had been in operation, insured
a continuance of their support. Defeat only had
the effect of arousing the whole democratic party
to renewed exertions, and for five years the strug-
gle was continued with unabated energy, and ter-
minated gloriously in the establishment of the con-
stitutional treasury in 1846.
Independent of the objections which may be
urged, that the constitution confers upon Congress
no authority to place the funds of the Government
under the control of corporations, there is a mani-
fest injustice in allowing banks to trade upon that
money. It establishes favoritism, and gives people
in <>ne section of the country privileges over those
less f< (l'tunate. Non-interference between individuals
is the palpable duty of Government. The specie
deposited with one bank by the United States,
serves as a basis for the circulation of paper, and
constitutes that institution a "pet" of the Gov-
ernment. This produces an evident violation of the
sacred principle of equality, which is the ground-
work of the constitution. Whatever temporary
benefits may accrue to individuals, or the nation,
from such a course, it is no excuse for a violation of
principle. The Government and the people had
both suffered greatly from the system which was
originated by Mr. Hamilton, the leader of the fed-
POLK AD MINIS TEAT ION. 383
eral party * The country has passed through pain-
ful experience, which shook society, and came near
destroying the glorious fabric erected by the wis-
dom and patriotism of our fathers. The morning
which broke upon this long night of darkness and
gloom, is a glorious opening to the future. And a
recurrence to the evils from which we have escaped,
would indicate positive political blindness, which
can derive no improvement from the terrible ordeal
from which our country has escaped.
Connected with the revenue of the United
States, it was deemed proper by the administration
to propose a warehousing system, and it was forci-
bly recommended by Mr. Walker in his first report
to Congress.f A bill was introduced into the Se-
* "From a report made on the 11th of February, 1841, from the
Secretary of the Treasury, it appeared that the losses which the Gov-
ernment has at various times suffered from connection with banks, were
estimated to amount to the enormous sum of $15,492,000. A report made
to the House of Representatives, April 30th, 1830, believed to have been
by Mr. McDuffie, estimates the aggregate losses from the receipt of bank
paper, which occurred prior to 1817, at $34,000,000. And in the report
of the Secretary of the Treasury, to which he has just alluded, the total
loss from 1789, to the people, (the other was in relation to the Government
itself,) from the existence of banks and the use of bank paper, is esti-
mated at $365,457,497."— Speech of Mr. Dromgoole, April 2d, 1846.
Congressional Globe, 1st session 29th Congress, p. 592.
Mr. Walker in his report to Congress, December 3d, 1845, states that
the United States Mint had had in its custody more than $114,000,000 of
dollars without the Government sustaining any loss.
The Government was equally fortunate while the independent treasury
bill, passed in 1840, was in operation, and it remains to be seen whether
any losses will be sustained under the constitutional treasury bill now
enforced.
f " If the cash duties are retained, as it is believed they should be, the
only sure method of restoring this trade is the adoption of the warehous-
ing system, by which the foreign imports may be kept in store by the Gov-
384 HISTORY OF THE
nate for that purpose by Mr. Dix, on the 21st of
January, 1840. It passed Congress during that
session, and received the approval of the President,
6th of August, 1846. The act provided that on
and after that day, the duties on all imported goods,
wares, < >r merchandise should be paid hi cash. That
goods upon which the duties were not paid should
be taken possession of by the Collector, and depos-
ited in public stores at the risk of the owner, and
subject at all times to his order, upon the payment
of the proper duties and expenses. In case the
g< >ods should remain in the storehouse more than one
year without the payment of the duties, then they
are to be appraised, and sold by the Collector at
public auction. Within one year after the goods
arc deposited in the public storehouse, they may be
withdrawn and transported to any other port of
entr \ .
Previous to the passage of that act, the ware-
house system was in existence, although the laws
whirh regulated it were not so simple and well de-
fined as the bill of 1840. Indeed, the principle
was established as early as 1799, and was enlarged
or contracted at various periods since the adoption
of the Constitution, for the benefit of the commer-
cial interest. The effect of the bill is to give an
extension of credit to the importer, who would oth-
erwise be required to pay the duties upon his
pnmiriit. until they are required for re-exportation abroad, or consumption
at home — in which latter contingency, and at the time when for that pur-
!>>.-• they are taken out of these stores for consumption, the duties are
paid, and, if re-exported, they pay no duty, but only the expense of sto-
rage. — Report "f Mr. Walker to Gm^nss, December, 1845.
POLK ADMINISTKATION. 385
merchandise as soon as it was landed. No possible
danger of loss to the Government can be appre-
hended, because the goods are retained in the pos-
session of the Collector, until the duties or charges
thereon are paid. The difficulty which the merch-
ant would sometimes encounter in being forced to
sell a portion of his wares to discharge the duties,
is obviated. The only effect is to give him time for
the payment of Government dues. This can be
done without loss to the United States, and with
great benefit to the importer. How far the bill
will meet the expectations of its advocates is yet to
be seen. It is stated that the amount of charges
received at the port of New- York, is less than the
sum expended by Government upomthem. This is
a reason why the act should be amended instead of
being repealed. It is easy to increase the charges
which are exacted for storing goods in the ware-
house, until the amount received is equal to the
sum disbursed. The country is very much indebted
to Mr. Dix, the able Senator from New- York, for
the passage of that law.
The Mexican war considerably increased the na-
tional debt, though not so much as was often pre-
dicted. The amount of the public debt remaining
unpaid on the 1st of October, 1845, was seventeen
million seventy-five thousand four hundred and
forty-five dollars and fifty-two cents.* The balance
in the treasury on the 1st of July, 1845, was seven
million six hundred and forty-eight thousand three
hundred and six dollars and twenty-two .cents.f
* Message of Mr. Polk to Congress, December, 1845. f Ibid.
25
386 HISTOEY OF THE
On the 2 2d of July, 1846, the President approved
an act authorizing him to issue treasury notes to
the amount of ten millions of dollars, or to borrow
that sum on the credit of the United States, at in-
terest not exceeding six per cent.* On the twenty-
eighth of January, 1847, the President was autho-
rized by law to cause treasury notes to be issued to
the amount of twenty-three millions of dollars.
The notes were to be reimbursed and redeemed by
the United States at the expiration of one year, or
two years from the dates of the said notes respec-
tive!}'. They were transferable by delivery and as-
signment endorsed upon them, and were received
in payment of all duties due the United States.
The holders o£ these treasury notes, by presenting
them at the Treasury of the United States, would
receive the amount in certificate of funded stock,
bluing interest at six per cent, per annum. A dis-
cretionary power was granted to borrow on the
credit of the United States, and to issue stock to
the amount of twenty-three millions of dollars.
On the 31st of March, 1848, authority was granted
to the Executive to borrow within one year there-
after on the credit of the United States, a sum not
exceeding sixteen millions of dollars, and to issue
stock of the United States as security for its pay-
llK'llt.f
The receipts into the treasury during the fiscal
year ending on the 30th of June, 1845, were twen-
ty-nine million seven hundred and sixty-nine thou-
* Public laws of the United Slates, collated by Little & Brown.
| Ibid.
POLK ADMINISTRATION. 387
sand one hundred and thirty-three dollars and fifty-
six cents ; of which there were derived from cus-
toms twenty-seven million five hundred and twen-
ty-eight thousand one hundred and twelve dollars
and seventy cents. The expenditures during that
period were twenty-nine million nine hundred and
sixty-eight thousand two hundred and six dollars
and ninety-eight cents.*
The amount of money received into the treasury
for the year ending June 30th, 1846, was twenty-
nine million four hundred and ninety-nine thou-
sand two hundred and forty-seven dollars and six
cents, of which there was derived front the customs
twenty-six million seven hundred and twelve thou-
sand six hundred and sixty-seven dollars and eight}*-
seven cents. Expenditures for the same period were
twenty-eight million thirty-one thousand one hun-
dred and fourteen dollars and twenty cents ; the
balance in the treasury on the 1st day of July, 1846,
was nine million one hundred and twenty-six thou-
sand four hundred and thirty-nine dollars and eight
cents. The amount of the public debt, including
treasury notes, on the 1st of December, 1846, was
twenty-four million two hundred and fifty-six thou-
sand four hundred and ninety-four dollars and sixty
cents ; of which the sum of seventeen million seven
hundred and eighty-eight thousand seven hundred
and ninety-nine dollars and sixty-two cents was out-
standing on the 4th of March, 1845, leaving the
amount incurred from that time to December 1846,
six million four hundred and sixty-seven thousand
* First annual message of Mr. Polk to Congress.
388 HISTOEY OF THE
six hundred and ninety-four dollars and ninety-eight
cents * For the purpose of increasing the revenue,
the Executive recommended the war tax upon tea
and coffee, and also upon the principal articles that
were at that time upon the free list. He also urged
the graduation and reduction of the price of the
public lands, as a means of increasing the revenue.^
The receipts into the treasury for the fiscal year
ending the 30th of June 1847, amounted to twenty-
six million three hundred and forty-six thousand
seven hundred and ninety dollars and thirty-seven
cents; of which there was derived from customs
twenty-three million seven hundred and forty-seven
thousand eight hundred and sixty-four dollars and
sixty-six cents. The expenditure during the same
period was fifty-nine million four hundred and fifty-
one thousand one hundred and seventy-seven dollars
and sixty-five cents, of which three million five hun-
dred and twenty-two thousand and eighty-two dol-
lars and thirty-seven cents was on account of pay-
ment of the principal and interest on public debt,
including treasury notes redeemed and unfunded.
On the 1st of December, 1847, the amount of the
public debt, including treasury notes, was forty-five
million six hundred and fifty-nine thousand six hun-
dred and fifty-nine dollars and forty cents. The debt
due on the 4th of March, 1845, when Mr. Polk en-
tered upon the duties of his office, was, including
treasury notes, seventeen million seven hundred and
eighty-eight thousand seven hundred and ninety-
* Message of Mr. Polk to Congress, December, 1846.
t Ibid.
POLK ADMINISTRATION. 389
nine dollars and sixty-two cents, and the addition
made to that sum from that period to December
7th, 1847, was twenty-seven million eight hundred
and seventy thousand eight hundred and fifty-nine
dollars and seventy-eight cents.*
The receipts into the treasury during the fiscal
year ending June 30th, 1848, amounted to thirty-five
million four hundred and thirty-six thousand seven
hundred and fifty dollars and fifty-nine cents. Of
this sum there was obtained in duties upon imports
thirty-one million seven hundred and fifty-seven
thousand and seventy dollars and ninety-six cents.
The expenditures during the same time, including
those for the war, and exclusive of payments of
principal and interest for the public debt, were for-
ty-two million eight hundred and eleven thousand
nine hundred and seventy dollars and three cents.f
It is extraordinary that the credit of the Govern-
ment during the war with Mexico was remarkably
high. This is the more surprising from the fact,
that the bonds of the Government during the pre-
ceding administration, and in time of peace, were
hawked about in the markets of Europe without
success. A loan of twenty-three million was au-
thorized by the act of the 28th of January, 1847. Of
that sum five million were paid to satisfy the claims
of public creditors, or exchanged for specie at par.
Eighteen million were offered for specie to the
highest bidder, and were awarded at premiums va-
rying from one-eighth of one per cent, to two per
* Message of Mr. Polk to Congress, December, 1 847.
f Message of Mr. Polk to Congress, December, 1848.
390 HISTORY OF THE
cent, above par. This was indeed not only a very
extraordinary, but an unexpected result. At the
time it occurred, there was no prospect of an imme-
diate termination of the war with Mexico. On the
10th of April, 1847, when it was awarded to the
highest bidders, Vera Cruz and the castle of San
Juan d'Ulloa had surrendered to our victorious arms.
But the enemy manifested an obstinate determina-
tion to resist the progress of the invaders, and sub-
sequently to that period, the road to Mexico was
rendered memorable by many a sanguinary battle-
field. Under these circumstances, that the money
should have been obtained by the Government at a
premium, presented a novelty to the financial world.