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Abridgment of the Debates of Congress, from 1789 to 1856. From Gales and Seatons' Annals of Congress; from their Register of debates; and from the official reported debates, by John C. Rives online

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Online LibraryUnited States. CongressAbridgment of the Debates of Congress, from 1789 to 1856. From Gales and Seatons' Annals of Congress; from their Register of debates; and from the official reported debates, by John C. Rives → online text (page 96 of 199)
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constitution. Reform is demanded. It is called
for by every public and by every private con-
sideration. Now is the time to make it. The
connection between bank and State is actually
dissolved. It is dissolved by operation of law,
and by the delinquency of these institutions.
They have forfeited the right to the deposits,
and lost the privilege of paying the revenue in
their notes, by ceasing to pay specie. The Gov-
ernment is now going on without them, and all
that is wanting is the appropriate legislation to
perpetuate the divorce which, in point of fact,
has already taken place. Now is the time to
act ; this the moment to restore the constitu-




Svb-Treasury Bill.

[September, 1837,

tional currency to the Federal Government ; to
restore the custody of the puhlio moneys to
national keepers ; and to avoid, in time to come,
the Calamitous revulsions and perilous catas-
trophes of 1814, 1819, and 1837.

And what is the obstacle to the adoption of
this course, so imperiously demanded by the
safety of the republic, and the welfare of the
people, and so earnestly recommended to us by
the Chief Magistrate ? "What is the obstacle —
what the power tliat countervails the Execu-
tive recommendation, paralyzes the action of
Congress, and stays the march of reform ? The
banks — the banks — the banks, are this obstacle,
and this power. They set up the pretension to
force their paper into the Federal Treasury, and
to force themselves to be constituted that Treas-
ury. Though now bankrupt, their paper dis-
honored, their doors closed against creditors,
every public and every private obligation vio-
lated, still they arrogate a supremacy over this
Federal Government ; they demand the guard-
ianship of the public moneys, and the privilege
of furnishing a Federal currency ; and, though
too weak to pay their debts, they are strong
enough to throttle this Government, and to
hold, in doubtful suspense, the issue of their
vast pretensions.

And what new power is this, so formidable
and so daring, and the name of which is not
seen in our constitution ?

Whence its origin, its progress, and its pres-
ent pretensions ? Sir, its origin is humble ; its
first progress slow ; its vast pretensions of re-
cent date. In the year 1780, the first petition
was presented to the Congress of the confedera-
tion for the establishment of a bank ; ten years
afterwards there were but three in the country ;
in twenty years more, there were only a few
dozen ; now nearly a thousand, and constantly
multiplying. The first petition was bottomed
solely upon patriotism, without the least design
of pecuniary advantage to the projectors, and
intended wholly to aid in furnishing supplies to
a detachment of the revolutionary army. I
will read the report of the committee of Con-
gress upon that petition, that the Senate may
see the progress which banks have made since
that day, and the change wliich has since taken
place in their character and views.

Jieport of a committee.
" Whereas, a number of the patriotic citizens of
Pennsylvania have communicated to Congress a
liberal offer, on their own credit, and by their own
exertions, to supply and transport three millions of
rations, and three hundred hogsheads of rum, for the
use of the army, and have established a bank for the
sole purpose of obtaining and transporting the said
supplies with the greater facility and despatch ; and
whereas, on the one hand, the associators, animated
to this laudable exertion by a desire to relieve the
public necessities, mean not to derive from it the
least pecuniary advantage, so, on the other, it is just
and reasonable that they shoiild bo fully reimbursed
and indemnified : Therefore, resolved, That Congress

entertain a high sense of the liberal offer of the said
associators to raise and transport the before-men-
tioned supplies for the army, and do accept the same
as a distinguished proof of their patriotism. Se.
solved, further. That the faith of the United States
be, and the same hereby is, pledged to the subscrihers
to the said bank, for their effectual reimbursement in
the premises."

Such is the recent and humble origin of
banking in this country. How gigantic has
been its progress since that day ! It is now the
predominating power in our America. Great
as it now is, what must it be in a few years
more, if it continues growing and expanding at
the same irate? What must it be in a few
years, if it succeeds now in this contest with
the Federal Government, and imposes its paper
currency upon the Federal Treasury, and con-
tinues to be the keeper of the public moneys?
The administration is accused of making war
upon the local banks. Was it war to give them
forty millions of money to keep ? Was it war
to receive their notes in payment of revenue ?
Is it war now to give them time for the pay-
ment of balances? Is it war upon them to
ask to be separated from them? Is divorce
war ? Is it war to decline receiving their paper
promises instead of the gold and silver of the
constitution, and to decline the further deposits
of public money with them? Is it war? No,
sir, it is peace, and the means of preserving
peace. It is concord and amity that this Gov-
ernment wants, and is taking the safest way to
secure, by declining to have any more causes
of collision with them. It is the local banks,
and especially the miscalled Bank of the United
States, which are pursuing the Federal Govern-
ment, refusing to let her alone, offering their
notes for cm-renoy, and their vaults for depos-
itories, and laboring to force these favors upon
us. This is the state of the contest. The local
banks are the actors, the pursuers, the assail-
ants ; the Federal Government is on the defence.
All she asks is to be exempted from the future
causes of collision with them. They have in-
curred the penalties of separation. They have
incurred the penalties. The very act which
created them depositories, and made their notes
receivable, denounced the loss of both in the
event of failing to meet their liabilities in specie.
That act is but little more than one year old;
it was not a year old when the condition was
violated, and which remains yet violated. Sep-
aration has resulted from their own conduct;
separation now exists ; cause for separation still
continues ; the Government says, let it be i>ei'-
petual; the banks say no! Eeceive us again;
receive us before we reform, before we repent,
before we make amends ; and if you do not, it
is war upon us. This is the state of the contest
between the Government and the banks. It is
attack, or at all events, forcible embrace and
conjunction on their part; it is defence and
refusal on ours.

The President, in his Message, recommends
four things : first, to discontinue the reception



September, 1837.]

Sub-Treasury Bill.


of local bank paper in payment of federal dues ;
secondly, to discontinue the same banks as de-
positories of the public moneys ; thirdly, to
make the future collection and disbursement of
the public moneys in gold and silver ; fourthly,
to take the keeping of the public moneys into
the hands of our own officers.

"What is there in this but a return to the
words and meaning of the constitution, and a
conformity to the practice of the Government
in the first years of President Washington's ad-
ministration ? When this Federal Government
was first formed, there was no Bank of the
United States, and no local banks, except
three north of the Potomac. By the act
of 1789, the revenues were directed to be col-
lected in " gold and silver coin only ; " and it
was usually drawn out of the hands of col-
lectors by drafts drawn upon them, payable
at sight. It was a most eifectual way of
drawing money out of their hands ; far more
so than an order to deposit in banks ; for the
drafts must be paid, or protested, at sight, while
the order to deposit may be eluded under va-
rious pretexts.

The right, and the obligation of the Govern-
ment to keep its own moneys in its own hands,
results from first principles, and from the great
law of self-preservation. Every thing else that
belongs to her, she keeps herself; and why not
keep that also, without which every thing else
is nothing Arms and ships — provisions, muni-
tions, and supplies of every kind — are kept in
the hands of Government ofBcers ; money is the
sinew of war, and why leave this sinew exposed
to be cut by any careless or faithless hand?
Money is the support and existence of the Gov-
ernment, the breath of Its nostrils, and why
leave this support, this breath, to the custody
of those over whom we have no control ? How
absurd to place our ships, our arms, our mili-
tary and naval supplies in the hands of those
who could refuse to deliver them when re-
quested, and put the Government to a suit at
law to recover their possession? Everybody
sees the absurdity of this ; but to place our
money in the same condition, and moreover to
subject it to the vicissitudes of trade, and the
perils of banking, is still more absurd ; for it is
the life blood, without which the Government
cannot live — the oil, without which no part of
its machinery can move.

England, with all her banks, trusts none of
them with the collection, keeping, and disburse-
ment of her public moneys. The Bank of Eng-
land is paid a specific sum to manage the public
debt; but the revenue is collected and disbursed
through subordinate collectors and receivers
general; and these receivers general are not
subject to the bankrupt laws, because the Gov-
ernment will not suffer its revenue to be oper-
ated upon by any law except its own will. In
France, subordinate collectors and receivers
general collect, keep, and disburse the public
moneys. If they deposit any thing in banks, it
is at their own risk. It is the same thing in

England. A bank deposit by an oflacer is at
the risk of himself and his securities. Too
much of the perils and vicissitudes of banking
is known in these countries to permit the Gov-
ernment ever to jeopard its revenues in their
keeping. All this is shown, fully and at large,
in a public document now on our tables. And
who does not recognize in these collectors and
receivers general of France and England the
ancient Koman offices of quaestors and pro-
qua3Stors ? These fiscal officers of France and
England are derivations from the Koman insti-
tutions ; and the same are found in all the mod-
ern kingdoms of Europe which were formerly,
like France and Britain, provinces of the Roman
Empire. The measure before the Senate is to
enable us to provide for our future safety, by
complying with our own constitution, and con-
forming to the practice of all nations, great or
small, ancient or modern.

Coming nearer home, and looking into our
own early history, what were the " continental
treasurers " of the confederation, and the " pro-
vincial treasurers and collectors," provided for
as early as July, 1775, but an imitation of the
French and English systems, and very near the
plan which we "propose now to re-establish?
These continental treasurers, and there were
two of them at first, though afterwards re-
duced to one, were the receivers general ; the
provincial treasurers and collectors were their
subordinates. By these officers the public
moneys were collected, kept, and disbursed;
for there were no banks then ! and all Govern-
ment drafts were drawn directly upon these
officers. This simple plan worked well during
the Revolution, and afterwards, until the new
Government was formed; and continued to
work, with a mere change of names and forms,
during the first years of Washington's admin-
istration, and until General Hamilton's bank
machinery got into play. This biU only pro-
poses to re-establish, in substance, the system
of the Revolution, of the Congress of the con-
federation, and of the first years of Washing-
ton's administration.

The bill reported by the chairman of the
Committee on Finance (Mr. Weight of New
York) presents the details of the plan for ac-
complishing this great result. That bill has
been printed and read. Its simplicity, economy,
and efficiency strike the sense of all who hear
it, and annihilate without argument, the most
formidable arguments of expense and patronage,
which had been conceived against it. The
present officers, the present mints, and one or
two more mints in the South, in the West, and
in the North, complete the plan. There will
be no necessity to carry masses of hard money
from one quarter of the Union to another.
Government drafts will make the transfer with-
out moving a dollar. A' Government draft
upon a national mint, will be the highest order
of bills of exchange. Money wanted by the
Government in one place, will be exchanged,
through merchants, for money in another place.




Svh-Treaiury Bill.

[Septembee, 1837.

Thus it has been for thousands of years, and
will forever he. We read in Cicero's letters
that, when he was Governor of Oilieia, in Asia
Minor, he directed Iiis qucmtor to deposit the
tribute of the province in Antiooh, and ex-
change it for money in Kome with merchants
engaged in the Oriental trade, of which Antioch
was one of the emporiums. This is the natural
course of things, and is too abviaus to require
explanation, or to admit of comment.

Objections are taken to the capacity of the
country to furnish the quantity of gold and
silver necessary to pay the revenues of the
Government in coin. It is supposed there is
not hard money enough for that purpose ? This
objection induces two inquiries. Pirst, how
much specie will be required for that purpose ?
Secondly, what is the present amount in the
country, and what the prospect of increase?
In reply to the first of these inquiries, it is to
be remembered that the President, in his Mes-
sage, supposes ten millions will be enough ; and
the Secretary 8f the Treasury, in his report
upon the finances, supposes that eight or ten
millions will do. Having paid some attention
to this point, I have come to the conclusion
that the one-fourth part of tile amount of the
annual revenue will be sufficient to pay the
whole ; and this opinion is formed upon an
observation of the fact, that in a regular state
of the finances, when no more revenue is raised
than the Government needs, about one-fourth
of the whole is always on hand, of course that
not more than one-fourth is taken out of circu-
lation. Upon this data, a revenue of twenty
millions would require but five millions to pay
it ; and a revenue of twenty-five millions would
require but six and a quarter millions to meet
it. A reduction of revenue to the wants of the
Treasury is the policy of the administration;
no more surpluses is the language of the repub-
lican party. About twenty-five millions may,
therefore, be the maximum ; and the payment
of this sum, it is shown, will not employ above
six or seven millions. Now, what is the ca-
pacity of the country to furnish this amount ?
How much specie have we, and what is the
prospect for more ? It is well remembered that
eighty millions was the computed supply at the
end of the last fiscal year ; to that amount we
have to add the increase of the present fiscal
year, being about five millions ; namely, an
excess of imports over exports of above four
millions, and the coinage of near a million of
gold. The future prospect is most encouraging.
The export of specie is over ; it is a drug in
London ; it can be borrowed there at 2f per
cent, per annum, and three per cent, is a com-
mon interest. What has been forced out is
ready to flow back. A large import must be
expected ; and if this bill passes to increase the
demand for it at home, and if the suspending
banks are made to resume payment, not less
than fifteen or twenty millions of dollars may
he expected within the ensuing year. This,
then, is our condition ; upwards of eighty mil-

lions now in the country, and the means in our
power to increase it largely. Now, cannot a
revenue of twenty-five millions, which will
never require a greater amount than six or
seven millions to be taken out of circulation at
any one time ; cannot such a revenue be met
from these resources ? I say it can ; and I say
this upon data, and will exhibit that data to the
Senate, that they may judge of the correctness
of my opinion. Pirst, I take the evidence fur-
nished by the history of our own country. The
first revenue act of 1789 prescribed " gold and
silver coin only " for the payment of the Fed-
eral revenue ; the revenue was then about four
and a half millions of dollars ; and the whole
amount of specie in the Union was estimated at
ten millions of dollars. Here then was a rev-
enue, nearly half the amount of specie in the
country, ordered to be collected in specie. I
speak of the law which ordered it to be so col-
lected, and to which there was no objection, on
account of the inadequacy of specie, either in
Congress or out of Congress. The revenue was
paid without complaint, and without difiiculty,
and, in all probability, did not abstract, at one
time, a million of dollars from circulation.
General Hamilton, the Secretary of the Treas-
ury, permitted notes of banks to be received.
Certainly he did, and, just as certainly, for no
reason founded on the inadequacy of the specie
circulation to meet the demands of the Govern-
ment. His reasons, as seen in his report to
Congress, were altogether of a different class ;
they were to enable the hanks to increase their
paper circulation ; to increase paper money ;
and to diffuse it generally over the Union.
There were then but three banks in the United
States, and those three to the north of the Po-
tomac ; they issued no small notes ; their aggre-
gate circulation was inconsiderable ; and it was
the plan of General Hamilton to increase their
number, and diffuse their paper. This was his
reason for admitting bank paper to be received ;
and to do so, he had to nullify, by construction,
the clear enactment of positive law.

The next piece of evidence I furnish is drawn
from the history of England, in the reign of
William III., immediately preceding the estab-
lishment of the Bank of England, and the in-
troduction of the paper sysem, and the funding
system, into that kingdom. The taxes were
then four millions, and the specie of the king-
dom sixteen millions. These taxes were paid
without difficulty ; for they probably did not
abstract one million sterling from circulation.
The last data I shall produce is from the history
of Prance, during the first administration of
Neckar, which about covered the period of our
Revolution. I speak of the first administration
of Neckar, and when the finances of France
were in a regular state, and not of his subse-
quent administration, when the extravagances
of the day and the subservience of the ministers
Oalonne and Brienne had involved those finances
in a ruin from which the talents of Neckar
could not extricate them. What was the rev-



Septembee, 1837.]

Sub-Treasury Bill.


enue and the specie circulation of France at
that time ? I say specie circulation ; for the
Mississippi scheme of John Law had cured the
nation of paper money, until the assignats of
the Revolution came upon the stage, and lived
their brief day. What was the revenue, and
the specie circulation out of which it was paid,
in the prosperous period of the French finances
to which I have alluded ? Twenty-two mil-
lions sterling of revenue ; about 110,000,000 of
dollars ; and ninety millions sterling of circula-
tion; about 450,000,000 of dollars. This vast
revenue, equal to one-fourth of the whole cir-
culation, was regularly paid ; and this estab-
lishes the only point for which I refer to it.
Now, to apply this historical experience to our
own country, and to the present times. Our
revenue may be about 25,000,000 ; one-fourth
of that sum will pay it ; we have upwards of
eighty millions of specie in the country, annual-
ly increasing, and certain to increase to the ut-
most extent of our wants, if we create a demand
for it. One hundred millions of exportable
productions will bring back just as much specie
as the country wants. The objection, then, to
the inadequacy of the specie in the country
falls to the ground. We have more than
enough for that purpose. We have but two
branches of revenue — the lands and the customs,
and both voluntary sources of income ; for no
person is under compulsion to purchase the
public lands, and no one is under compulsion
to import foreign goods. These are the sources
of our revenues. Their payment is voluntary ;
and even during this summer, since the suspen-
sion of specie payments, the income from one
of these sources (the lands) has been equal to
the best years before the two great years of
speculation. I will answer for this branch of
revenue. Bring the new lands into market,
and reduce the price of the old lands, and the
Government will get ten or twelve mOlions of
gold and silver from them in the next year.

I am free to admit that the whole of this
eighty millions is not now in the hands of the
people ; that much of it is locked up in the
vaults of the banks. But this is temporary ; it
cannot last much longer ; public opinion is om-
nipotent, and must prevail ; that opinion is
against the conduct of the banks ; and in the
progress of it they must see their own doom.
Their vaults are shut, but their eyes must be
opening ; and with these eyes they must begin
to see what the public is beginning to think of
a banking system which, in a season of peace,
tranquillity, and general prosperity, and with a
hundred millions of exports, and four times as
much specie as ever was in the country before,
are either unable, or unwilling, to meet any
part of their obligations in specie — even to pay
out picayunes — and have driven the people to
the use of irredeemable paper and shinplasters,
and the Federal Government itself to an issue
of Treasury notes.

We are taunted with these Treasury notes ; it
seems to be matter of triumph that the Govern-

ment is reduced to the necessity of issuing
them ; but with what justice ? And how soon
can any Government that wishes it, emerge
from the wretchedness of depreciated paper,
and stand erect on the solid foundations of gold
and silver ? How long will it take any respect-
able Government, that so wills it, to accom-
plish this great change ? Our own history, at
the close of the Eevolution, answers the ques-
tion ; and more' recently, and more strikingly,
the history of France answers it also. I speak
of the French finances from 1800 to 1807 ; from
the commencement of the Consulate to the
peace of Tilsit. This wonderful period is re-
plete with instruction on the subject of finance
and currency. The whole period is full of in-
struction ; but I can only seize two views — the
beginning and the end — and, for the sake of
precision, will read what I propose to present.
I read from Bignon, author of the civil and
diplomatic history of France during the Con-
sulate and the first years of the empire ; writ-
ten at the testamentary request of the Emperor

After stating that the expenditures of the
republic were six hundred millions of francs —
about one hundred and ten millions of dollars
— when Bonaparte became First Consul, the
historian proceeds :

" At his arrival at power, a sum of 160,000 francs
in money [about $32,000] was all that the public
chests contained. « » * » »

In the impossibility of meeting the current service
by the ordinary receipts, the Directorial Government,
had resorted to ruinous expedients, and had thrown
into circulation bills of various values, and which
sunk upon the spot fifty to eighty per cent. A part
of the arrearages had been discharged in bills two-
thirds on credit payable to the bearer, but which, in
fact, the Treasury was not able to pay when due. The
remaining third had been inscribed in the great book,
under the name of consolidated third. For the pay-
ment of the forced requisitions to which they had
been obliged to have recourse, there had been issued
bills receivable in payment of the revenues. Finally,
the Government, in order to satisfy the most impe-
rious wants, gave orders upon the receivers general,
delivered in advance to contractors, which they ne-
gotiated before they began to furnish the supplies

Online LibraryUnited States. CongressAbridgment of the Debates of Congress, from 1789 to 1856. From Gales and Seatons' Annals of Congress; from their Register of debates; and from the official reported debates, by John C. Rives → online text (page 96 of 199)