Of all the faculties which I have stated of a bank, that which creates a circulation is the most important to the community at large. It is that in which thousands may be interested, who never obtained a discount, or made a deposit with a bank. Whatever a government agrees to receive in payment of the public dues is a medium of circulation; is money, current money, no matter what its form may be—treasury notes, drafts drawn at Washington, by the treasurer, on the receiver-general at New York, or, to use the language employed in various parts of this bill, ‘such notes, bills, or paper, issued under the authority of the United States.’ These various provisions were probably inserted not only to cover the case of treasury notes, but that of these drafts in due season. But if there were no express provision of law, that these drafts should be receivable in payment of public dues, they would, necessarily, be so employed, from their own intrinsic value.The want of the community of a general circulation of uniform value every where in the United States, would occasion vast amounts of the species of draft which I have described to remain in circulation. The appropriations this year will probably fall not much short of thirty millions. Thirty millions of treasury drafts on receivers-general, of every denomination, and to any amount, may be issued by the secretary of the treasury. What amount would remain in circulation cannot be determineda priori, I suppose not less than ten or fifteen millions; at the end of another year, some ten or fifteen millions more; they would fill all the channels of circulation. The war between the government and state banks continuing, and this mammoth government bank being in the market, constantly demanding specie for its varied and ramified operations, confidence would be lost in the notes of the local banks, their paper would gradually cease to circulate, and the banks themselves would be crippled and broken. The paper of the government bank would ultimately fill the vacuum, as it would instantly occupy the place of the notes of the late bank of the United States.I am awareMr.President, that by the twenty-fifth section of the bill, in order to disguise the purpose of the vast machinery which we are about constructing, it is provided that it shall be the duty of the secretary of the treasury, to issue and publish regulations to enforce the speedy presentation of all government drafts for payment at the place where payable, and so forth. Now, what a tremendous power is here vested in the secretary! He is to prescribe rules and regulations to enforce thespeedypresentationof all government drafts for payment at the place where payable. The speedy presentation! In the case I have supposed, a man has his ten thousand dollars, in drafts on the receiver-general at New York. The secretary is empowered to enact regulations requiring him speedily to present them, and if he do not, the secretary may order them to be paid atSt.Louis. At New York they may be worth a premium of five per centum; onSt.Louis, they may be liable to a discount of five per centum. Now, in a free government, who would ever think of subjecting the property or money of a citizen to the exercise of such a power by any secretary of the treasury? What opportunity does it not afford to reward a partisan, or punish an opponent? It will be impossible to maintain such an odious and useless restriction for any length of time. Why should the debtor, (as the government would be, in the case of such drafts as I have supposed,) require his creditor, (as the holder of the draft would be,) to apply within a prescribed time for his payment? No, sir; the system would control you; you could not so control the system. But if such a ridiculous restriction could be continued, the drafts would, nevertheless, whilst they were out, be the time long or short, perform the office of circulation and money.Let us trace a little further the operation of this government bank, and follow it out to its final explosion. I have supposed the appropriation of some thirty millions of dollars annually by the government, to be disbursed in the form of drafts, issued at Washington by the treasury department, upon the depositaries. Of that amount, some ten or fifteen millions would remain, the first year, in circulation; at the end of another year, a similar amount would continue in circulation; and so on, from year to year, until, at the end of a series of some five or six years, there would be in circulation, to supply the indispensable wants of commerce and of a general medium of uniform value, not less than some sixty or eighty millions of drafts, issued by the government. These drafts would be generally upon the receiver-general at New York, because on that point, they would be preferred over all others, as they would command a premium, or be at par, throughout the whole extent of the United States; and we have seen that the secretary of the treasury is invested with ample authority to concentrate at that point the whole revenue of the United States.All experience has demonstrated, that in banking operations, a much larger amount of paper can be kept out in circulation than the specie which it is necessary to retain in the vaults to meet it when presented for payment. The proportions which the same experience has ascertained to be entirely safe, are one of specie to three of paper. If, therefore, the executive government had sixty millions of dollars accumulated at the port of New York, in thehands of the receiver-general, represented by sixty millions of government drafts in circulation, it would be known that twenty of that sixty millions would be sufficient to retain to meet any amount of drafts, which, in ordinary times, would be presented for payment. There would then remain forty millions in the vaults, idle and unproductive, and of which no practical use could be made. Well; a great election is at hand in the state of New York, the result of which will seal the fate of an existing administration. If the application of ten millions of that dormant capital could save, at some future day, a corrupt executive from overthrow, can it be doubted, that the ten millions would be applied to preserve it in power? Again; let us suppose some great exigency to arise; a season of war, creating severe financial pressure and embarrassment. Would not an issue of paper, founded upon and exceeding the specie in the vaults, in some such proportions as experience had demonstrated might be safely emitted, be authorized? Finally, the whole amount of specie might be exhausted, and then, as it is easier to engrave and issue bank notes, than to perform the unpopular office of imposing taxes and burdens, the discovery would be made, that thecreditof the government was a sufficient basis whereupon to make emissions of paper money, to be redeemed when peace and prosperity returned. Then we should have the days of continental money, and of assignats, restored! Then we should have that government paper medium which the senator from South Carolina, (Mr.Calhoun,) considers the most perfect of all currency!Meantime, and during the progress of this vast government machine, the state banks would be all prostrated. Working well, as it may, if honestly administered, in the first period of its existence, it will be utterly impossible for them to maintain the unequal competition. They could not maintain it, even if the government were actuated by no unfriendly feelings towards them. But when we know the spirit which animates the present executive towards them, who can doubt that they must fall in the unequal contest? Their issues will be discredited and discountenanced, and that system of bankruptcy which the president would even now put into operation against them, will, in the sequel, be passed and enforced without difficulty.Assuming the downfall of the local banks—the inevitable consequence of the operations of this great government bank; assuming, as I have shown would be the case, that the government would monopolize the paper issues of the country, and obtain the possession of a great portion of the specie of the country, we should then behold a combined and concentrated moneyed power, equal to that of all the existing banks of the United States, with that of the late bank of the United States superadded. This tremendous power would be wielded by the secretary of the treasuryacting under the immediate commands of the president of the United States. Here would be a perfect union of the sword and the purse; here would be no imaginary, but an actual, visible, tangible, consolidation of the moneyed power. Who or what could withstand it? The states themselves would become suppliants at the feet of the executive for a portion of those paper emissions, of the power to issue which they had been stripped, and which he now exclusively possessed.Mr.President, my observation and experience have satisfied me, that the safety of liberty and property consists in the division of power, whether political or pecuniary. In our federative system, our security is to be found in that happy distribution of power which exists between the federal government and the state governments. In our monetary system, as it lately existed, its excellence resulted from that beautiful arrangement, by which the states had their institutions for local purposes, and the general government its institution for the more general purposes of the whole union. There existed the greatest congeniality between all the parts of this admirable system. All was homogeneous. There was no separation of the federal government from the states or from the people. There was no attempt to execute practically, that absurdity of sustaining, among the same people, two different currencies of unequal value. And how admirably did the whole system, during the forty years of its existence, move and work! And on the two unfortunate occasions of its ceasing to exist, how quickly did the business and transactions of the country run into wild disorder and utter confusion!Hitherto, I have considered this new project as it is, according to its true nature and character, and what it must inevitably become. I have not examined it as it is not, but as its friends would represent it to be. They hold out the idea that it is a simple contrivance to collect, to keep, and to disburse, the public revenue. In that view of it, every consideration of safety and security, recommends the agency of responsible corporations, rather than the employment of particular individuals. It has been shown, during the course of this debate, that the amount which has been lost by the defalcation of individuals has exceeded three or four times the amount of all that has been lost by the local banks, although the sums confided to the care of individuals have not been probably one tenth part of the amount that has been in the custody of the local banks. And we all know, that, during the forty years of existence of the two banks of the United States, not one cent was lost of the public revenue.I have been curious,Mr.President, to know whence this idea of receivers-general was derived. It has been supposed to have been borrowed from France. It required all the power of that most extraordinary man that ever lived, Napoleon Bonaparte, when he wasin his meridian greatness, to displace the farmers-general, and to substitute in their place the receivers-general. The new system requires, I think I have heard it stated, something like one hundred thousand employees to have it executed. And, notwithstanding the modesty of the infant promises of this new project, I have no doubt that ultimately we shall have to employ a number of persons approximating to that which is retained in France. That will undoubtedly be the case whenever we shall revive the system of internal taxation. In France, what reconciled them to the system was, that Napoleon first, and the Bourbons afterwards, were pleased with the immense patronage which it gave them. They liked to have one hundred thousand dependents to add strength to the throne, which had been recently constructed or reascended. I thought, however, that the learned chairman of the committee of finance must have had some other besides the French model for his receivers-general; and, accordingly, upon looking into Smith’s history of his own state, I found, that, when it was yet a colony, some century and a half ago, and when its present noble capital still retained the name of New Amsterdam, the historian says; ‘among the principal laws enacted at this session, we may mention that for establishing the revenue, which was drawn into precedent. The sums raised by it were made payable into the hands of receivers-general, and issued by the governor’s warrant. By this means the governor became, for a season, independent of the people, and hence we find frequent instances of the assemblies contending with him for the discharge of debts to private persons, contracted on the faith of the government.’ The then governor of the colony was a man of great violence of temper, and arbitrary in his conduct. How the sub-treasury system of that day operated, the same historian informs us in a subsequent part of his work. ‘The revenue,’ he says, ‘established the last year, was at this session continued five years longer than was originally intended. This was rendering the governor independent of the people. For, at that day, the assembly had no treasure, but the amount of all taxes went, of course, into the hands of the receiver-general, who was appointed by the crown. Out of this fund, moneys were only issuable by the governor’s warrant, so that every officer in the government, fromMr.Blaithwait, who drew annually five per centum out of the revenue, as auditor-general, down to the meanest servant of the public, became dependent, solely, of the governor. And hence we find the house, at the close of every session, humbly addressing his excellency, for the trifling wages of their own clerk.’ And,Mr.President, if this measure should unhappily pass, the day may come, when the senate of the United States will have humbly to implore some future president of the United States to grant it money to pay the wages of its own sergeant-at-arms, and doorkeeper.Who,Mr.President, are the most conspicuous of those, who perseveringly pressed this bill upon congress and the American people? Its drawer is the distinguished gentleman in the white house, not far off; its endorser is the distinguished senator from South Carolina, here present. What the drawer thinks of the endorser, his cautious reserve and stifled enmity prevent us from knowing. But the frankness of the endorser has not left us in the same ignorance with respect to his opinion of the drawer. He has often expressed it upon the floor of the senate. On an occasion not very distant, denying to him any of the nobler qualities of the royal beast of the forest, he attributed to him those which belong to the most crafty, most skulking, and one of the meanest of the quadruped tribe.Mr.President, it is due to myself to say, that I do not altogether share with the senator from South Carolina in this opinion of the president of the United States. I have always found him, in his manners and deportment, civil, courteous, and gentlemanly; and he dispenses, in the noble mansion which he now occupies, one worthy the residence of the chief magistrate of a great people, a generous and liberal hospitality. An acquaintance with him, of more than twenty years’ duration, has inspired me with a respect for the man, although, I regret to be compelled to say, I detest the magistrate.The eloquent senator from South Carolina has intimated that the course of my friends and myself, in opposing this bill, was unpatriotic, and that we ought to have followed in his lead; and, in a late letter of his, he has spoken of his alliance with us, and of his motives for quitting it. I cannot admit the justice of his reproach. We united, if, indeed, there were any alliance in the case, to restrain the enormous expansion of executive power; to arrest the progress of corruption; to rebuke usurpation; and to drive the Goths and Vandals from the capital; to expel Brennus and his horde from Rome, who, when he threw his sword into the scale, to augment the ransom demanded from the mistress of the world, showed his preference for gold; that he was a hard-money chieftain. It was by the much more valuable metal of iron that he was driven from her gates. And how often have we witnessed the senator from South Carolina, with woful countenance, and in doleful strains, pouring forth touching and mournful eloquence on the degeneracy of the times, and the downward tendency of the republic? Day after day, in the senate, have we seen the displays of his lofty and impassioned eloquence. Although I shared largely with the senator, in his apprehension for the purity of our institutions, and the permanency of civil liberty, disposed always to look at the brighter side of human affairs, I was sometimes inclined to hope that the vivid imagination of the senator had depicted the dangers by which we were encompassed in somewhat stronger colors than they justified. The arduous contest in whichwe were so long engaged, was about to terminate in a glorious victory. The very object for which the alliance was formed, was about to be accomplished. At this critical moment the senator left us; he left us for the very purpose of preventing the success of the common cause. He took up his musket, knapsack, and shot-pouch, and joined the other party. He went, horse, foot, and dragoon, and he himself composed the whole corps. He went, as his present most distinguished ally commenced with his expunging resolution,solitary and alone. The earliest instance recorded in history, within my recollection, of an ally drawing off his forces from the combined army, was that of Achilles, at the siege of Troy. He withdrew with all his troops, and remained in the neighborhood, in sullen and dignified inactivity. But he did not join the Trojan forces; and when, during the progress of the siege, his faithful friend fell in battle, he raised his avenging arm, drove the Trojans back into the gates of Troy, and satiated his vengeance by slaying Priam’s noblest and dearest son, the finest hero in the immortal Iliad. But Achilles had been wronged, or imagined himself wronged, in the person of the fair and beautiful Briseis. We did no wrong to the distinguished senator from South Carolina. On the contrary, we respected him, confided in his great and acknowledged ability, his uncommon genius, his extensive experience, his supposed patriotism; above all, we confided in his stern and inflexible fidelity. Nevertheless, he left us, and joined our common opponents, distrusting and distrusted. He left us, as he tells us in his Edgefield letter, because the victory which our common arms were about to achieve, was not to enure to him and his party, but exclusively to the benefit of his allies and their cause. I thought that, actuated by patriotism, (that noblest of human virtues,) we had been contending together for our common country, for her violated rights, her threatened liberties, her prostrate constitution. Never did I suppose that personal or party considerations entered into our views. Whether, if victory shall ever again be about to perch upon the standard of the spoils party, (the denomination which the senator from South Carolina has so often given to his present allies,) he will not feel himself constrained, by the principles on which he has acted, to leave them, because it may not enure to the benefit of himself and his party, I leave to be adjusted between themselves.The speech of the senator from South Carolina was plausible, ingenious, abstract, metaphysical, and generalizing. It did not appear to me to be adapted to the bosoms and business of human life. It was aërial, and not very high up in the air,Mr.President, either, not quite as high asMr.Clayton was in his last ascension in his balloon. The senator announced that there was a single alternative, and no escape from one or the other branch of it. He stated that we must take the bill under consideration, or the substituteproposed by the senator from Virginia. I do not concur in that statement of the case. There is another course embraced in neither branch of the senator’s alternative; and that course is, to do nothing; always the wisest, when you are not certain what you ought to do. Let us suppose that neither branch of the alternative is accepted, and that nothing is done. What, then, would be the consequence? There would be a restoration of the law of 1789, with all its cautious provisions and securities, provided by the wisdom of our ancestors, which has been so trampled upon by the late and present administrations. By that law, establishing the treasury department, the treasure of the United States is to be received, kept, and disbursed, by the treasurer, under a bond with ample security, under a large penalty fixed by law, and not left, as this bill leaves it, to the uncertain discretion of a secretary of the treasury. If, therefore, we were to do nothing, that law would be revived; the treasurer would have the custody, as he ought to have, of the public money, and doubtless he would make special deposits of it, in all instances, with safe and sound state banks, as in some cases the secretary of the treasury is now obliged to do. Thus, we should have in operation that very special deposit system, so much desired by some gentlemen, by which the public money would remain separate and unmixed with the money of banks. There is yet another course, unembraced by either branch of the alternative presented by the senator from South Carolina; and that is, to establish a bank of the United States, constituted according to the old and approved method of forming such an institution, tested and sanctioned by experience; a bank of the United States, which should blend public and private interests, and be subject to public and private control, united together in such manner as to present safe and salutary checks against all abuses. The senator mistakes his own abandonment of that institution as ours. I know that the party in power has barricaded itself against the establishment of such a bank. It adopted, at the last extra session, the extraordinary and unprecedented resolution, that the people of the United States should not have such a bank, although it might be manifest that there was a clear majority of them demanding it. But the day may come, and I trust is not distant, when the will of the people must prevail in the councils of their own government; and, when it does arrive, a bank will be established.The senator from South Carolina reminds us that we denounced the pet bank system; and so we did, and so we do. But does it therefore follow, that, bad as that system was, we must be driven into the acceptance of a system infinitely worse? He tells us that the bill under consideration takes the public funds out of the hands of the executive, and places them in the hands of the law. It does no such thing. They are now without law, it is true, in the custody of the executive; and the bill proposes by law to confirm them inthat custody, and to convey new and enormous powers of control to the executive over them. Every custodary of the public funds, provided by the bill, is a creature of the executive, dependent upon his breath, and subject to the same breath for removal, whenever the executive, from caprice, from tyranny, or from party motives, shall choose to order it. What safety is there for the public money, if there were a hundred subordinate executive officers charged with its care, whilst the doctrine of the absolute unity of the whole executive power, promulgated by the last administration, and persisted in by this, remains unrevoked and unrebuked.Whilst the senator from South Carolina professes to be the friend of state banks, he has attacked the whole banking system of the United States. He is their friend; he only thinks they are all unconstitutional! Why? Because the coining power is possessed by the general government, and that coining power, he argues, was intended to supply a currency of the precious metals; but the state banks absorb the precious metals, and withdraw them from circulation, and, therefore, are in conflict with the coining power. That power, according to my view of it, is nothing but a naked authority to stamp certain pieces of the precious metals, in fixed proportions of alloy and pure metal, prescribed by law, so that their exact value may be known. When that office is performed, the power isfunctus officio; the money passes out of the mint, and becomes the lawful property of those who legally acquire it. They may do with it as they please, throw it into the ocean, bury it in the earth, or melt it in a crucible, without violating any law. When it has once left the vaults of the mint, the law-maker has nothing to do with it, but to protect it against those who attempt to debase or counterfeit, and, subsequently, to pass it as lawful money. In the sense in which the senator supposes banks to conflict with the coining power, foreign commerce, and especially our commerce with China, conflict with it much more extensively. That is the great absorbent of the precious metals, and is, therefore, much more unconstitutional than the state banks. Foreign commerce sends them out of the country; banks retain them within it. The distinguished senator is no enemy to the banks; he merely thinks them injurious to the morals and industry of the country. He likes them very well, but he nevertheless believes that they levy a tax of twenty-five millions annually on the industry of the country! Let us examine,Mr.President, how this enormous and iniquitous assessment is made, according to the argument of the senator from South Carolina. He states that there is a mass of debt due from the community to the banks, amounting to four hundred and seventy-five millions of dollars, the interest upon which, constituting about that sum of twenty-five millions of dollars, forms the exceptionable tax. Now, this sum is not paid by the whole community, but only by those individuals who obtain discounts fromthe banks. They borrow money at six per centum interest, and invest it in profitable adventures, or otherwise employ it. They would not borrow it if they did not suppose they could make profit by it; and the probability is, that they do make profit by it. Instead, therefore, of there being any loss in the operation, there is an actual gain to the community, by the excess of profit made beyond six per centum interest, which they pay. What are banks? They are mere organized agencies, for the loan of money, and the transaction of monetary business; regulated agencies, acting under the prescriptions of law, and subject to a responsibility, moral and legal, far transcending that under which any private capitalist operates. A number of persons, not choosing to lend out their money privately, associate together, bring their respective capitals into a common stock, which is controlled and managed by the corporate government of a bank. If no association whatever had been formed, a large portion of this capital, a large portion, therefore, of that very debt of four hundred and seventy-five millions of dollars, would still exist, in the shape of private loans. The senator from South Carolina might as well collect the aggregate amount of all the mortgages, bonds, and notes, which have been executed in the United States, for loans, and assert that the interest paid upon the total sum, constituted a tax, levied upon the community.In the liquidation of the debt due to the banks from the community, and from the banks to the community, there would not be as much difficulty as the senator seems to apprehend. From the mass of debts due to the banks are to be deducted, first, the amount of subscriptions which constitute their capitals; secondly, the amount of deposits to the credit of individuals in their custody; and, thirdly, the amount of their notes in circulation. How easily will these mutual debts neutralize each other! The same person, in numberless instances, will combine in himself the relations both of creditor and debtor.The only general operation of banks beyond their discounts and deposits, which pervades the whole community, is that of furnishing a circulation in redeemable paper, beyond the amount of specie to redeem it in their vaults. And can it be doubted that this additional supply of money furnishes a powerful stimulus to industry and production, fully compensating any casual inconveniences, which sometimes, though rarely, occur? Banks reduce the rate of interest, and repress inordinate usury. The salutary influence of banking operations is demonstrated in countries and sections of country where they prevail, when contrasted with those in which they are not found. In the former, all is bustle, activity, general prosperity. The country is beautified and adorned by the noble works of internal improvement; the cities are filled with splendid edifices, and the wharves covered with the rich productions of our own or of foreign climates. In the latter, all is sluggishness,slothfulness, and inactivity. England, in modern times, illustrates the great advantages of banks, of credit, and of stimulated industry. Contrast her with Spain, destitute of all those advantages. In ancient times, Athens would present an image of full and active employment of all the energies of man, carried to the highest point of civilization, whilst her neighbor, Sparta, with her iron money, affords another of the boasted benefits of metallic circulation.The senator from South Carolina would do the banks no harm; but they are deemed by him highly injurious to the planting interest! According to him, they inflate prices, and the poor planter sells his productions for hard money, and has to purchase his supplies at the swollen prices produced by a paper medium. Now, I must dissent altogether from the senator’s statement of the case. England, the principal customer of the planter, is quite as much, if not more, a paper country than ours. And the paper-money prices of the one country are neutralized by the paper-money prices of the other country. If the argument were true, that a paper-money country trades disadvantageously with a hard-money country, we ought to continue to employ a paper medium, to counterbalance the paper medium of England. And if we were to banish our paper, and substitute altogether a metallic currency, we should be exposed to the very inequality which has been insisted upon. But there is nothing in that view of the matter which is presented by the senator from South Carolina. If, as he asserts, prices were always inflated in this country, beyond their standard in England, the rate of exchange would be constantly against us. An examination, however, into the actual state of exchange between the two countries, for a long series of years, evinces that it has generally been in our favor. In the direct trade between England and this country, I have no doubt there is a large annual balance against us; but that balance is adjusted and liquidated by balances in our favor in other branches of our foreign trade, which have finally concentrated in England, as the great centre of the commercial world.Of all the interests and branches of industry in this country, none has profited more by the use and employment of credit and capital derived from banks and other sources, than the planting interest. It habitually employs credit in all countries where planting agriculture prevails. The states of Alabama, Mississippi, Arkansas, and Louisiana, have almost sprung into existence, as it were, by magic, or, at least, have been vastly improved and extended, under the influence of the credit system. Lands, slaves, utensils, beasts of burden, and other supplies, have been constantly bought, and still continue to be purchased, upon credit; and bank agency is all essential to give the most beneficial operation to these credits. But the argument of the senator from South Carolina,which I am combating, would not be correct, if it were true that we have inflated prices on this side of the Atlantic, without a corresponding inflation of price on the other side; because the planter generally selling at home, and buying at home, the proceeds of his sale, whatever they may be, constitute the means by which he effects his purchases, and consequently neutralize each other. In what do we of the west receive payment for the immense quantity of live stock and other produce of our industry, which we annually sell to the south and southwest, but that paper medium now so much decried and denounced? The senator from South Carolina is very fond of the state banks; but he thinks there is no legitimate currency except that of the constitution. He contends that the power which the government possesses to impose taxes, restricts it, in their payment, to the receipt of the precious metals. But the constitution does not say so. The power is given in broad and unrestricted terms; and the government is left at liberty to collect the taxes in whatever medium or commodity, from the exigencies of the case, it can collect them. It is, doubtless, much the most convenient to collect them in money, because that represents, or can command, every thing, the want of which is implied by the power of taxation. But suppose there was no money in the country; none, whatever, to be extorted by the tax-gatherer from an impoverished people? Is the power of government to cease, and the people to be thrown back into a state of nature? The senator asks, if taxes could be levied and collected in tobacco, in cotton, and other commodities? Undoubtedly they could, if the necessity existed for such an inconvenient imposition. Such a case of necessity did exist in the colony of Virginia, and other colonies, prior to the revolution, and taxes were accordingly levied in tobacco or other commodities, as wolf-scalps, even at this day, compose a part of the revenue of more than one state.The argument, then, of the senator, against the right of the government to receive bank notes in payment of public dues, a practice coeval with the existence of the government, does not seem to me to be sound. It is not accurate, for another reason. Bank notes, when convertible at the will of the holder into specie, are so much counted or told specie, like the specie which is counted and put in marked kegs, denoting the quantity of their contents. The senator tells us, that it has been only within a few days that he has discovered that it is illegal to receive bank notes in payment of public dues. Does he think that the usage of the government, under all its administrations, and with every party in power, which has prevailed for nigh fifty years, ought to be set aside by a novel theory of his, just dreamed into existence, even if it possess the merit of ingenuity? The bill under consideration, which has been eulogized by the senator as perfect in its structure and details, contains a provision that bank notes shall be receivedin diminished proportions, during a term of six years. He himself introduced that identical principle. It is the only part of the bill that is emphatically his. How, then, can he contend that it is unconstitutional to receive bank notes in payment of public dues? I appeal from himself to himself. The senator further contends, that general deposits cannot be made with banks, and be thus confounded with the general mass of the funds on which they transact business. The argument supposes that the money collected for taxes must be preserved in identity; but that is impossible, often, to do. May not a collector give the small change which he has received from one tax-payer, to another tax-payer, to enable him to effect his payment? May he not change gold for silver, orvice versa, or both, if he be a distant collector, to obtain an undoubted remittance to the public treasury? What,Mr.President, is the process of making deposits with banks? The deposit is made, and a credit is entered for its amount to the government. That credit is supposed to be the exact equivalent of the amount deposited, ready and forthcoming to the government whenever it is wanted for the purposes of disbursement. It is immaterial to the government whether it receives back again the identical money put in, or other money of equal value. All that it wants is, what it put in the bank, or its equivalent; and that, in ordinary times, with such prudent banks as alone ought to be selected, it is sure of getting. Again: the treasury has frequently to make remittances to foreign countries, to meet the expenditure necessary there for our naval squadrons, and other purposes. They are made to the bankers, to the Barings or the Rothschilds, in the form of bills of exchange, purchased in the market by the agents of the government here, with money drawn out of the treasury. Here is one conversion of the money received from the tax-gatherer into the treasury. The bills are transmitted to the bankers, honored, paid, and the amount credited by them to the United States. Are the bankers bound to retain the proceeds of the bills in identity? Are they bound to do more than credit the government for an equal amount, for which they stand responsible, whenever it is wanted? If they should happen to use any portion of those very proceeds of bills remitted to them in their banking operations, would it be drawing money from the treasury, contrary to the provisions of the constitution? The senator from South Carolina contends, that there is no constitutional power to contract with the twenty-five selected banks, as proposed in the substitute; yet the deposit act of 1836, which obtained the hearty approbation of that senator, contained a similar provision; and the very bill under consideration, so warmly supported by him, provides, under certain contingencies, for contracts to be made with state banks, to receive deposits of the public money upon compensation. He objects to the substitute, that it converts twenty-five state banks into a systemof federal institutions; but the employment of state institutions by the federal authority, no more makes them federal, than the employment of federal institutions by the states, converts them into state institutions. This mutual aid, and this reciprocal employment of the several institutions of the general and particular governments, is one of the results and beauties of our admirable, though complex system of government. The general government has the use of the capital, court-houses, prisons, and penitentiaries, in the several states. Do they, therefore, cease to appertain to the states? It is to be borne in mind, that although the state banks may occasionally be used by the federal authority, their legal responsibility to the several states remains unimpaired. They continue to be accountable to them, and their existence can only be terminated or prolonged by the state authority. And being governed, as they are, by corporate authority, emanating from, and amenable to, state jurisdiction, and not under the control of the executive of the United States, constitutes at once a greater security for the public money, and more safety to the public liberty. It has been argued that a separation of the government from the banks will diminish the executive power. It must be admitted that the custody of the public money in various banks, subject to the control of state authority, furnishes some check upon the possible abuses of the executive government. But the argument maintains, that the executive has least power when it has most complete possession of the public treasury! The senator from South Carolina contends that the separation in question being once effected, the relation of the federal government and the state banks will be antagonistical. I believe so,Mr.President. That is the very thing I wish to prevent. I want them to live in peace, harmony, and friendship. If they are antagonists, how is it possible that the state banks can maintain their existence against the tremendous influence of this government? Especially, if this government should be backed by such a vast treasury bank, as I verily believe this bill is intended to create! And what becomes of the argument urged by the senator from South Carolina, and the abolition resolutions offered by him at an early period of the session, asserting that the general government is bound to protect the domestic institutions of the several states?The substitute is not, I think, what the welfare of the country requires. It may serve the purpose of a good half-way house. Its accommodations appear fair; and, with the feelings of a wearied traveller, one may be tempted to stop awhile, and refresh himself there. I shall vote for it as an amendment to the bill, because I believe it the least of two evils, if it should, indeed, inflict any evil; or rather, because I feel myself in the position of a patient, to whom the physician presents, in one hand, a cup of arsenic, and, in the other, a cup of ptisan: I reject the first, because of the instantdeath with which it is charged; I take the latter, as being, at the most, harmless, and depend upon thevis medicatrix natura. It would have been a great improvement, in my opinion, if the mode of bringing about the resumption of specie payments, contained in the substitute, were reversed: that is to say, if instead of fixing on the first of July for resumption, it had provided that the notes of a certain number of safe, sound, and unquestionable banks to be selected, should be forthwith received, by the general government, in payment of all public dues; and that, if the selected banks did not resume, by a future designated day, their notes should cease to be taken. Several immediate effects would follow: first, the government would withdraw from the market as a competitor with the banks for specie, and they would be left undisturbed to strengthen themselves. And, secondly, confidence would be restored, by taking off the discredit, and discountenance thrown upon all banks by the government. And why should these notes not be so received? They are as good as treasury notes, if not better. They answer all the purposes of the state governments and the people. They now would buy as much as specie could have commanded at the period of suspension. They could be disbursed by the government. And, finally, the measure would be temporary.But the true and only efficacious and permanent remedy, I solemnly believe, is to be found in a bank of the United States, properly organized and constituted. We are told that such a bank is fraught with indescribable danger; and that the government must, in the sequel, get possession of the bank, or the bank of the government. I oppose to these imaginary terrors the practical experience of forty years. I oppose to them the issue of the memorable contest, commenced by the late president of the United States, against the late bank of the United States. The administration of that bank had been without serious fault. It had given no just offence to the government, towards which it had faithfully performed every financial duty. Under its able and enlightened president, it had fulfilled every anticipation which had been formed by those who created it. President Jackson pronounced the edict that it must fall, and it did fall, against the wishes of an immense majority of the people of the United States; against the convictions of its utility entertained by a large majority of the states; and to the prejudice of the best interests of the whole country. If an innocent, unoffending, and highly beneficial institution could be thus easily destroyed by the power of one man, where would be the difficulty of crushing it, if it had given any real cause for just animadversion? Finally, I oppose to these imaginary terrors the example deducible from English history. There a bank has existed since the year 1694, and neither has the bank got possession of the government, nor the government of the bank. They haveexisted in harmony together, both conducing to the prosperity of that great country; and they have so existed, and so contributed, because each has avoided cherishing towards the other that wanton and unnecessary spirit of hostility which was unfortunately engendered in the bosom of the late president of the United States.I am admonished, sir, by my exhausted strength, and by, I fear, your more exhausted patience, to hasten to a close.Mr.President, a great, novel, and untried measure, is perseveringly urged upon the acceptance of congress. That it is pregnant with tremendous consequences, for good or evil, is undeniable, and admitted by all. We firmly believe that it will be fatal to the best interests of this country, and ultimately subversive of its liberties. You, who have been greatly disappointed in other measures of equal promise, can only hope, in the doubtful and uncertain future, that its operation may prove salutary. Since it was first proposed at the extra session, the whole people have not had an opportunity of passing in judgment upon it at their elections. As far as they have, they have expressed their unqualified disapprobation. From Maine to the state of Mississippi, its condemnation has been loudly thundered forth. In every intervening election, the administration has been defeated, or its former majorities neutralized. Maine has spoken; New York, Pennsylvania, Maryland, Ohio, Rhode Island, Mississippi, and Michigan, all these states, in tones and terms not to be misunderstood, have denounced the measure. The key-stone state (God bless her) has twice proclaimed her rejection of it; once at the polls, and once through her legislature. Friends and foes of the administration have united in condemning it. And, at the very moment when I am addressing you, a large meeting of the late supporters of the administration, headed by the distinguished gentleman who presided in the electoral college which gave the vote of that patriotic state to president Van Buren, are assembling in Philadelphia, to protest solemnly against the passage of this bill. Is it right that, under such circumstances, it should be forced upon a reluctant but free and intelligent people? Is it right that this senate, constituted as it now is, should give its sanction to the measure? I say it in no disrespectful or taunting sense, but we are entitled, according to the latest expressions of the popular will, and in virtue of manifestations of opinion, deliberately expressed by state legislatures, to a vote of thirty-five against the bill; and I am ready to enter, with any senator friendly to the administration, into details to prove the assertion. Will the senate, then, bring upon itself the odium of passing this bill? I implore it to forbear, forbear, forbear! I appeal to the instructed senators. Is this government made for us, or for the people and the states whose agents we are? Are we not bound so to administer it as to advance their welfare, promote their prosperity, and give general satisfaction? Will that sacred trust be fulfilled, if the known sentiments of largeand respectable communities are despised and contemned by those whom they have sent here? I call upon the honorable senator from Alabama, (Mr.King,) with whom I have so long stood in the public councils, shoulder to shoulder, bearing up the honor and the glory of this great people, to come now to their rescue. I call upon all the senators; let us bury deep and for ever the character of the partisan, rise up patriots and statesmen, break the vile chains of party, throw the fragments to the winds, and feel the proud satisfaction that we have made but a small sacrifice to the paramount obligations which we owe our common country.
Of all the faculties which I have stated of a bank, that which creates a circulation is the most important to the community at large. It is that in which thousands may be interested, who never obtained a discount, or made a deposit with a bank. Whatever a government agrees to receive in payment of the public dues is a medium of circulation; is money, current money, no matter what its form may be—treasury notes, drafts drawn at Washington, by the treasurer, on the receiver-general at New York, or, to use the language employed in various parts of this bill, ‘such notes, bills, or paper, issued under the authority of the United States.’ These various provisions were probably inserted not only to cover the case of treasury notes, but that of these drafts in due season. But if there were no express provision of law, that these drafts should be receivable in payment of public dues, they would, necessarily, be so employed, from their own intrinsic value.
The want of the community of a general circulation of uniform value every where in the United States, would occasion vast amounts of the species of draft which I have described to remain in circulation. The appropriations this year will probably fall not much short of thirty millions. Thirty millions of treasury drafts on receivers-general, of every denomination, and to any amount, may be issued by the secretary of the treasury. What amount would remain in circulation cannot be determineda priori, I suppose not less than ten or fifteen millions; at the end of another year, some ten or fifteen millions more; they would fill all the channels of circulation. The war between the government and state banks continuing, and this mammoth government bank being in the market, constantly demanding specie for its varied and ramified operations, confidence would be lost in the notes of the local banks, their paper would gradually cease to circulate, and the banks themselves would be crippled and broken. The paper of the government bank would ultimately fill the vacuum, as it would instantly occupy the place of the notes of the late bank of the United States.
I am awareMr.President, that by the twenty-fifth section of the bill, in order to disguise the purpose of the vast machinery which we are about constructing, it is provided that it shall be the duty of the secretary of the treasury, to issue and publish regulations to enforce the speedy presentation of all government drafts for payment at the place where payable, and so forth. Now, what a tremendous power is here vested in the secretary! He is to prescribe rules and regulations to enforce thespeedypresentationof all government drafts for payment at the place where payable. The speedy presentation! In the case I have supposed, a man has his ten thousand dollars, in drafts on the receiver-general at New York. The secretary is empowered to enact regulations requiring him speedily to present them, and if he do not, the secretary may order them to be paid atSt.Louis. At New York they may be worth a premium of five per centum; onSt.Louis, they may be liable to a discount of five per centum. Now, in a free government, who would ever think of subjecting the property or money of a citizen to the exercise of such a power by any secretary of the treasury? What opportunity does it not afford to reward a partisan, or punish an opponent? It will be impossible to maintain such an odious and useless restriction for any length of time. Why should the debtor, (as the government would be, in the case of such drafts as I have supposed,) require his creditor, (as the holder of the draft would be,) to apply within a prescribed time for his payment? No, sir; the system would control you; you could not so control the system. But if such a ridiculous restriction could be continued, the drafts would, nevertheless, whilst they were out, be the time long or short, perform the office of circulation and money.
Let us trace a little further the operation of this government bank, and follow it out to its final explosion. I have supposed the appropriation of some thirty millions of dollars annually by the government, to be disbursed in the form of drafts, issued at Washington by the treasury department, upon the depositaries. Of that amount, some ten or fifteen millions would remain, the first year, in circulation; at the end of another year, a similar amount would continue in circulation; and so on, from year to year, until, at the end of a series of some five or six years, there would be in circulation, to supply the indispensable wants of commerce and of a general medium of uniform value, not less than some sixty or eighty millions of drafts, issued by the government. These drafts would be generally upon the receiver-general at New York, because on that point, they would be preferred over all others, as they would command a premium, or be at par, throughout the whole extent of the United States; and we have seen that the secretary of the treasury is invested with ample authority to concentrate at that point the whole revenue of the United States.
All experience has demonstrated, that in banking operations, a much larger amount of paper can be kept out in circulation than the specie which it is necessary to retain in the vaults to meet it when presented for payment. The proportions which the same experience has ascertained to be entirely safe, are one of specie to three of paper. If, therefore, the executive government had sixty millions of dollars accumulated at the port of New York, in thehands of the receiver-general, represented by sixty millions of government drafts in circulation, it would be known that twenty of that sixty millions would be sufficient to retain to meet any amount of drafts, which, in ordinary times, would be presented for payment. There would then remain forty millions in the vaults, idle and unproductive, and of which no practical use could be made. Well; a great election is at hand in the state of New York, the result of which will seal the fate of an existing administration. If the application of ten millions of that dormant capital could save, at some future day, a corrupt executive from overthrow, can it be doubted, that the ten millions would be applied to preserve it in power? Again; let us suppose some great exigency to arise; a season of war, creating severe financial pressure and embarrassment. Would not an issue of paper, founded upon and exceeding the specie in the vaults, in some such proportions as experience had demonstrated might be safely emitted, be authorized? Finally, the whole amount of specie might be exhausted, and then, as it is easier to engrave and issue bank notes, than to perform the unpopular office of imposing taxes and burdens, the discovery would be made, that thecreditof the government was a sufficient basis whereupon to make emissions of paper money, to be redeemed when peace and prosperity returned. Then we should have the days of continental money, and of assignats, restored! Then we should have that government paper medium which the senator from South Carolina, (Mr.Calhoun,) considers the most perfect of all currency!
Meantime, and during the progress of this vast government machine, the state banks would be all prostrated. Working well, as it may, if honestly administered, in the first period of its existence, it will be utterly impossible for them to maintain the unequal competition. They could not maintain it, even if the government were actuated by no unfriendly feelings towards them. But when we know the spirit which animates the present executive towards them, who can doubt that they must fall in the unequal contest? Their issues will be discredited and discountenanced, and that system of bankruptcy which the president would even now put into operation against them, will, in the sequel, be passed and enforced without difficulty.
Assuming the downfall of the local banks—the inevitable consequence of the operations of this great government bank; assuming, as I have shown would be the case, that the government would monopolize the paper issues of the country, and obtain the possession of a great portion of the specie of the country, we should then behold a combined and concentrated moneyed power, equal to that of all the existing banks of the United States, with that of the late bank of the United States superadded. This tremendous power would be wielded by the secretary of the treasuryacting under the immediate commands of the president of the United States. Here would be a perfect union of the sword and the purse; here would be no imaginary, but an actual, visible, tangible, consolidation of the moneyed power. Who or what could withstand it? The states themselves would become suppliants at the feet of the executive for a portion of those paper emissions, of the power to issue which they had been stripped, and which he now exclusively possessed.
Mr.President, my observation and experience have satisfied me, that the safety of liberty and property consists in the division of power, whether political or pecuniary. In our federative system, our security is to be found in that happy distribution of power which exists between the federal government and the state governments. In our monetary system, as it lately existed, its excellence resulted from that beautiful arrangement, by which the states had their institutions for local purposes, and the general government its institution for the more general purposes of the whole union. There existed the greatest congeniality between all the parts of this admirable system. All was homogeneous. There was no separation of the federal government from the states or from the people. There was no attempt to execute practically, that absurdity of sustaining, among the same people, two different currencies of unequal value. And how admirably did the whole system, during the forty years of its existence, move and work! And on the two unfortunate occasions of its ceasing to exist, how quickly did the business and transactions of the country run into wild disorder and utter confusion!
Hitherto, I have considered this new project as it is, according to its true nature and character, and what it must inevitably become. I have not examined it as it is not, but as its friends would represent it to be. They hold out the idea that it is a simple contrivance to collect, to keep, and to disburse, the public revenue. In that view of it, every consideration of safety and security, recommends the agency of responsible corporations, rather than the employment of particular individuals. It has been shown, during the course of this debate, that the amount which has been lost by the defalcation of individuals has exceeded three or four times the amount of all that has been lost by the local banks, although the sums confided to the care of individuals have not been probably one tenth part of the amount that has been in the custody of the local banks. And we all know, that, during the forty years of existence of the two banks of the United States, not one cent was lost of the public revenue.
I have been curious,Mr.President, to know whence this idea of receivers-general was derived. It has been supposed to have been borrowed from France. It required all the power of that most extraordinary man that ever lived, Napoleon Bonaparte, when he wasin his meridian greatness, to displace the farmers-general, and to substitute in their place the receivers-general. The new system requires, I think I have heard it stated, something like one hundred thousand employees to have it executed. And, notwithstanding the modesty of the infant promises of this new project, I have no doubt that ultimately we shall have to employ a number of persons approximating to that which is retained in France. That will undoubtedly be the case whenever we shall revive the system of internal taxation. In France, what reconciled them to the system was, that Napoleon first, and the Bourbons afterwards, were pleased with the immense patronage which it gave them. They liked to have one hundred thousand dependents to add strength to the throne, which had been recently constructed or reascended. I thought, however, that the learned chairman of the committee of finance must have had some other besides the French model for his receivers-general; and, accordingly, upon looking into Smith’s history of his own state, I found, that, when it was yet a colony, some century and a half ago, and when its present noble capital still retained the name of New Amsterdam, the historian says; ‘among the principal laws enacted at this session, we may mention that for establishing the revenue, which was drawn into precedent. The sums raised by it were made payable into the hands of receivers-general, and issued by the governor’s warrant. By this means the governor became, for a season, independent of the people, and hence we find frequent instances of the assemblies contending with him for the discharge of debts to private persons, contracted on the faith of the government.’ The then governor of the colony was a man of great violence of temper, and arbitrary in his conduct. How the sub-treasury system of that day operated, the same historian informs us in a subsequent part of his work. ‘The revenue,’ he says, ‘established the last year, was at this session continued five years longer than was originally intended. This was rendering the governor independent of the people. For, at that day, the assembly had no treasure, but the amount of all taxes went, of course, into the hands of the receiver-general, who was appointed by the crown. Out of this fund, moneys were only issuable by the governor’s warrant, so that every officer in the government, fromMr.Blaithwait, who drew annually five per centum out of the revenue, as auditor-general, down to the meanest servant of the public, became dependent, solely, of the governor. And hence we find the house, at the close of every session, humbly addressing his excellency, for the trifling wages of their own clerk.’ And,Mr.President, if this measure should unhappily pass, the day may come, when the senate of the United States will have humbly to implore some future president of the United States to grant it money to pay the wages of its own sergeant-at-arms, and doorkeeper.
Who,Mr.President, are the most conspicuous of those, who perseveringly pressed this bill upon congress and the American people? Its drawer is the distinguished gentleman in the white house, not far off; its endorser is the distinguished senator from South Carolina, here present. What the drawer thinks of the endorser, his cautious reserve and stifled enmity prevent us from knowing. But the frankness of the endorser has not left us in the same ignorance with respect to his opinion of the drawer. He has often expressed it upon the floor of the senate. On an occasion not very distant, denying to him any of the nobler qualities of the royal beast of the forest, he attributed to him those which belong to the most crafty, most skulking, and one of the meanest of the quadruped tribe.Mr.President, it is due to myself to say, that I do not altogether share with the senator from South Carolina in this opinion of the president of the United States. I have always found him, in his manners and deportment, civil, courteous, and gentlemanly; and he dispenses, in the noble mansion which he now occupies, one worthy the residence of the chief magistrate of a great people, a generous and liberal hospitality. An acquaintance with him, of more than twenty years’ duration, has inspired me with a respect for the man, although, I regret to be compelled to say, I detest the magistrate.
The eloquent senator from South Carolina has intimated that the course of my friends and myself, in opposing this bill, was unpatriotic, and that we ought to have followed in his lead; and, in a late letter of his, he has spoken of his alliance with us, and of his motives for quitting it. I cannot admit the justice of his reproach. We united, if, indeed, there were any alliance in the case, to restrain the enormous expansion of executive power; to arrest the progress of corruption; to rebuke usurpation; and to drive the Goths and Vandals from the capital; to expel Brennus and his horde from Rome, who, when he threw his sword into the scale, to augment the ransom demanded from the mistress of the world, showed his preference for gold; that he was a hard-money chieftain. It was by the much more valuable metal of iron that he was driven from her gates. And how often have we witnessed the senator from South Carolina, with woful countenance, and in doleful strains, pouring forth touching and mournful eloquence on the degeneracy of the times, and the downward tendency of the republic? Day after day, in the senate, have we seen the displays of his lofty and impassioned eloquence. Although I shared largely with the senator, in his apprehension for the purity of our institutions, and the permanency of civil liberty, disposed always to look at the brighter side of human affairs, I was sometimes inclined to hope that the vivid imagination of the senator had depicted the dangers by which we were encompassed in somewhat stronger colors than they justified. The arduous contest in whichwe were so long engaged, was about to terminate in a glorious victory. The very object for which the alliance was formed, was about to be accomplished. At this critical moment the senator left us; he left us for the very purpose of preventing the success of the common cause. He took up his musket, knapsack, and shot-pouch, and joined the other party. He went, horse, foot, and dragoon, and he himself composed the whole corps. He went, as his present most distinguished ally commenced with his expunging resolution,solitary and alone. The earliest instance recorded in history, within my recollection, of an ally drawing off his forces from the combined army, was that of Achilles, at the siege of Troy. He withdrew with all his troops, and remained in the neighborhood, in sullen and dignified inactivity. But he did not join the Trojan forces; and when, during the progress of the siege, his faithful friend fell in battle, he raised his avenging arm, drove the Trojans back into the gates of Troy, and satiated his vengeance by slaying Priam’s noblest and dearest son, the finest hero in the immortal Iliad. But Achilles had been wronged, or imagined himself wronged, in the person of the fair and beautiful Briseis. We did no wrong to the distinguished senator from South Carolina. On the contrary, we respected him, confided in his great and acknowledged ability, his uncommon genius, his extensive experience, his supposed patriotism; above all, we confided in his stern and inflexible fidelity. Nevertheless, he left us, and joined our common opponents, distrusting and distrusted. He left us, as he tells us in his Edgefield letter, because the victory which our common arms were about to achieve, was not to enure to him and his party, but exclusively to the benefit of his allies and their cause. I thought that, actuated by patriotism, (that noblest of human virtues,) we had been contending together for our common country, for her violated rights, her threatened liberties, her prostrate constitution. Never did I suppose that personal or party considerations entered into our views. Whether, if victory shall ever again be about to perch upon the standard of the spoils party, (the denomination which the senator from South Carolina has so often given to his present allies,) he will not feel himself constrained, by the principles on which he has acted, to leave them, because it may not enure to the benefit of himself and his party, I leave to be adjusted between themselves.
The speech of the senator from South Carolina was plausible, ingenious, abstract, metaphysical, and generalizing. It did not appear to me to be adapted to the bosoms and business of human life. It was aërial, and not very high up in the air,Mr.President, either, not quite as high asMr.Clayton was in his last ascension in his balloon. The senator announced that there was a single alternative, and no escape from one or the other branch of it. He stated that we must take the bill under consideration, or the substituteproposed by the senator from Virginia. I do not concur in that statement of the case. There is another course embraced in neither branch of the senator’s alternative; and that course is, to do nothing; always the wisest, when you are not certain what you ought to do. Let us suppose that neither branch of the alternative is accepted, and that nothing is done. What, then, would be the consequence? There would be a restoration of the law of 1789, with all its cautious provisions and securities, provided by the wisdom of our ancestors, which has been so trampled upon by the late and present administrations. By that law, establishing the treasury department, the treasure of the United States is to be received, kept, and disbursed, by the treasurer, under a bond with ample security, under a large penalty fixed by law, and not left, as this bill leaves it, to the uncertain discretion of a secretary of the treasury. If, therefore, we were to do nothing, that law would be revived; the treasurer would have the custody, as he ought to have, of the public money, and doubtless he would make special deposits of it, in all instances, with safe and sound state banks, as in some cases the secretary of the treasury is now obliged to do. Thus, we should have in operation that very special deposit system, so much desired by some gentlemen, by which the public money would remain separate and unmixed with the money of banks. There is yet another course, unembraced by either branch of the alternative presented by the senator from South Carolina; and that is, to establish a bank of the United States, constituted according to the old and approved method of forming such an institution, tested and sanctioned by experience; a bank of the United States, which should blend public and private interests, and be subject to public and private control, united together in such manner as to present safe and salutary checks against all abuses. The senator mistakes his own abandonment of that institution as ours. I know that the party in power has barricaded itself against the establishment of such a bank. It adopted, at the last extra session, the extraordinary and unprecedented resolution, that the people of the United States should not have such a bank, although it might be manifest that there was a clear majority of them demanding it. But the day may come, and I trust is not distant, when the will of the people must prevail in the councils of their own government; and, when it does arrive, a bank will be established.
The senator from South Carolina reminds us that we denounced the pet bank system; and so we did, and so we do. But does it therefore follow, that, bad as that system was, we must be driven into the acceptance of a system infinitely worse? He tells us that the bill under consideration takes the public funds out of the hands of the executive, and places them in the hands of the law. It does no such thing. They are now without law, it is true, in the custody of the executive; and the bill proposes by law to confirm them inthat custody, and to convey new and enormous powers of control to the executive over them. Every custodary of the public funds, provided by the bill, is a creature of the executive, dependent upon his breath, and subject to the same breath for removal, whenever the executive, from caprice, from tyranny, or from party motives, shall choose to order it. What safety is there for the public money, if there were a hundred subordinate executive officers charged with its care, whilst the doctrine of the absolute unity of the whole executive power, promulgated by the last administration, and persisted in by this, remains unrevoked and unrebuked.
Whilst the senator from South Carolina professes to be the friend of state banks, he has attacked the whole banking system of the United States. He is their friend; he only thinks they are all unconstitutional! Why? Because the coining power is possessed by the general government, and that coining power, he argues, was intended to supply a currency of the precious metals; but the state banks absorb the precious metals, and withdraw them from circulation, and, therefore, are in conflict with the coining power. That power, according to my view of it, is nothing but a naked authority to stamp certain pieces of the precious metals, in fixed proportions of alloy and pure metal, prescribed by law, so that their exact value may be known. When that office is performed, the power isfunctus officio; the money passes out of the mint, and becomes the lawful property of those who legally acquire it. They may do with it as they please, throw it into the ocean, bury it in the earth, or melt it in a crucible, without violating any law. When it has once left the vaults of the mint, the law-maker has nothing to do with it, but to protect it against those who attempt to debase or counterfeit, and, subsequently, to pass it as lawful money. In the sense in which the senator supposes banks to conflict with the coining power, foreign commerce, and especially our commerce with China, conflict with it much more extensively. That is the great absorbent of the precious metals, and is, therefore, much more unconstitutional than the state banks. Foreign commerce sends them out of the country; banks retain them within it. The distinguished senator is no enemy to the banks; he merely thinks them injurious to the morals and industry of the country. He likes them very well, but he nevertheless believes that they levy a tax of twenty-five millions annually on the industry of the country! Let us examine,Mr.President, how this enormous and iniquitous assessment is made, according to the argument of the senator from South Carolina. He states that there is a mass of debt due from the community to the banks, amounting to four hundred and seventy-five millions of dollars, the interest upon which, constituting about that sum of twenty-five millions of dollars, forms the exceptionable tax. Now, this sum is not paid by the whole community, but only by those individuals who obtain discounts fromthe banks. They borrow money at six per centum interest, and invest it in profitable adventures, or otherwise employ it. They would not borrow it if they did not suppose they could make profit by it; and the probability is, that they do make profit by it. Instead, therefore, of there being any loss in the operation, there is an actual gain to the community, by the excess of profit made beyond six per centum interest, which they pay. What are banks? They are mere organized agencies, for the loan of money, and the transaction of monetary business; regulated agencies, acting under the prescriptions of law, and subject to a responsibility, moral and legal, far transcending that under which any private capitalist operates. A number of persons, not choosing to lend out their money privately, associate together, bring their respective capitals into a common stock, which is controlled and managed by the corporate government of a bank. If no association whatever had been formed, a large portion of this capital, a large portion, therefore, of that very debt of four hundred and seventy-five millions of dollars, would still exist, in the shape of private loans. The senator from South Carolina might as well collect the aggregate amount of all the mortgages, bonds, and notes, which have been executed in the United States, for loans, and assert that the interest paid upon the total sum, constituted a tax, levied upon the community.
In the liquidation of the debt due to the banks from the community, and from the banks to the community, there would not be as much difficulty as the senator seems to apprehend. From the mass of debts due to the banks are to be deducted, first, the amount of subscriptions which constitute their capitals; secondly, the amount of deposits to the credit of individuals in their custody; and, thirdly, the amount of their notes in circulation. How easily will these mutual debts neutralize each other! The same person, in numberless instances, will combine in himself the relations both of creditor and debtor.
The only general operation of banks beyond their discounts and deposits, which pervades the whole community, is that of furnishing a circulation in redeemable paper, beyond the amount of specie to redeem it in their vaults. And can it be doubted that this additional supply of money furnishes a powerful stimulus to industry and production, fully compensating any casual inconveniences, which sometimes, though rarely, occur? Banks reduce the rate of interest, and repress inordinate usury. The salutary influence of banking operations is demonstrated in countries and sections of country where they prevail, when contrasted with those in which they are not found. In the former, all is bustle, activity, general prosperity. The country is beautified and adorned by the noble works of internal improvement; the cities are filled with splendid edifices, and the wharves covered with the rich productions of our own or of foreign climates. In the latter, all is sluggishness,slothfulness, and inactivity. England, in modern times, illustrates the great advantages of banks, of credit, and of stimulated industry. Contrast her with Spain, destitute of all those advantages. In ancient times, Athens would present an image of full and active employment of all the energies of man, carried to the highest point of civilization, whilst her neighbor, Sparta, with her iron money, affords another of the boasted benefits of metallic circulation.
The senator from South Carolina would do the banks no harm; but they are deemed by him highly injurious to the planting interest! According to him, they inflate prices, and the poor planter sells his productions for hard money, and has to purchase his supplies at the swollen prices produced by a paper medium. Now, I must dissent altogether from the senator’s statement of the case. England, the principal customer of the planter, is quite as much, if not more, a paper country than ours. And the paper-money prices of the one country are neutralized by the paper-money prices of the other country. If the argument were true, that a paper-money country trades disadvantageously with a hard-money country, we ought to continue to employ a paper medium, to counterbalance the paper medium of England. And if we were to banish our paper, and substitute altogether a metallic currency, we should be exposed to the very inequality which has been insisted upon. But there is nothing in that view of the matter which is presented by the senator from South Carolina. If, as he asserts, prices were always inflated in this country, beyond their standard in England, the rate of exchange would be constantly against us. An examination, however, into the actual state of exchange between the two countries, for a long series of years, evinces that it has generally been in our favor. In the direct trade between England and this country, I have no doubt there is a large annual balance against us; but that balance is adjusted and liquidated by balances in our favor in other branches of our foreign trade, which have finally concentrated in England, as the great centre of the commercial world.
Of all the interests and branches of industry in this country, none has profited more by the use and employment of credit and capital derived from banks and other sources, than the planting interest. It habitually employs credit in all countries where planting agriculture prevails. The states of Alabama, Mississippi, Arkansas, and Louisiana, have almost sprung into existence, as it were, by magic, or, at least, have been vastly improved and extended, under the influence of the credit system. Lands, slaves, utensils, beasts of burden, and other supplies, have been constantly bought, and still continue to be purchased, upon credit; and bank agency is all essential to give the most beneficial operation to these credits. But the argument of the senator from South Carolina,which I am combating, would not be correct, if it were true that we have inflated prices on this side of the Atlantic, without a corresponding inflation of price on the other side; because the planter generally selling at home, and buying at home, the proceeds of his sale, whatever they may be, constitute the means by which he effects his purchases, and consequently neutralize each other. In what do we of the west receive payment for the immense quantity of live stock and other produce of our industry, which we annually sell to the south and southwest, but that paper medium now so much decried and denounced? The senator from South Carolina is very fond of the state banks; but he thinks there is no legitimate currency except that of the constitution. He contends that the power which the government possesses to impose taxes, restricts it, in their payment, to the receipt of the precious metals. But the constitution does not say so. The power is given in broad and unrestricted terms; and the government is left at liberty to collect the taxes in whatever medium or commodity, from the exigencies of the case, it can collect them. It is, doubtless, much the most convenient to collect them in money, because that represents, or can command, every thing, the want of which is implied by the power of taxation. But suppose there was no money in the country; none, whatever, to be extorted by the tax-gatherer from an impoverished people? Is the power of government to cease, and the people to be thrown back into a state of nature? The senator asks, if taxes could be levied and collected in tobacco, in cotton, and other commodities? Undoubtedly they could, if the necessity existed for such an inconvenient imposition. Such a case of necessity did exist in the colony of Virginia, and other colonies, prior to the revolution, and taxes were accordingly levied in tobacco or other commodities, as wolf-scalps, even at this day, compose a part of the revenue of more than one state.
The argument, then, of the senator, against the right of the government to receive bank notes in payment of public dues, a practice coeval with the existence of the government, does not seem to me to be sound. It is not accurate, for another reason. Bank notes, when convertible at the will of the holder into specie, are so much counted or told specie, like the specie which is counted and put in marked kegs, denoting the quantity of their contents. The senator tells us, that it has been only within a few days that he has discovered that it is illegal to receive bank notes in payment of public dues. Does he think that the usage of the government, under all its administrations, and with every party in power, which has prevailed for nigh fifty years, ought to be set aside by a novel theory of his, just dreamed into existence, even if it possess the merit of ingenuity? The bill under consideration, which has been eulogized by the senator as perfect in its structure and details, contains a provision that bank notes shall be receivedin diminished proportions, during a term of six years. He himself introduced that identical principle. It is the only part of the bill that is emphatically his. How, then, can he contend that it is unconstitutional to receive bank notes in payment of public dues? I appeal from himself to himself. The senator further contends, that general deposits cannot be made with banks, and be thus confounded with the general mass of the funds on which they transact business. The argument supposes that the money collected for taxes must be preserved in identity; but that is impossible, often, to do. May not a collector give the small change which he has received from one tax-payer, to another tax-payer, to enable him to effect his payment? May he not change gold for silver, orvice versa, or both, if he be a distant collector, to obtain an undoubted remittance to the public treasury? What,Mr.President, is the process of making deposits with banks? The deposit is made, and a credit is entered for its amount to the government. That credit is supposed to be the exact equivalent of the amount deposited, ready and forthcoming to the government whenever it is wanted for the purposes of disbursement. It is immaterial to the government whether it receives back again the identical money put in, or other money of equal value. All that it wants is, what it put in the bank, or its equivalent; and that, in ordinary times, with such prudent banks as alone ought to be selected, it is sure of getting. Again: the treasury has frequently to make remittances to foreign countries, to meet the expenditure necessary there for our naval squadrons, and other purposes. They are made to the bankers, to the Barings or the Rothschilds, in the form of bills of exchange, purchased in the market by the agents of the government here, with money drawn out of the treasury. Here is one conversion of the money received from the tax-gatherer into the treasury. The bills are transmitted to the bankers, honored, paid, and the amount credited by them to the United States. Are the bankers bound to retain the proceeds of the bills in identity? Are they bound to do more than credit the government for an equal amount, for which they stand responsible, whenever it is wanted? If they should happen to use any portion of those very proceeds of bills remitted to them in their banking operations, would it be drawing money from the treasury, contrary to the provisions of the constitution? The senator from South Carolina contends, that there is no constitutional power to contract with the twenty-five selected banks, as proposed in the substitute; yet the deposit act of 1836, which obtained the hearty approbation of that senator, contained a similar provision; and the very bill under consideration, so warmly supported by him, provides, under certain contingencies, for contracts to be made with state banks, to receive deposits of the public money upon compensation. He objects to the substitute, that it converts twenty-five state banks into a systemof federal institutions; but the employment of state institutions by the federal authority, no more makes them federal, than the employment of federal institutions by the states, converts them into state institutions. This mutual aid, and this reciprocal employment of the several institutions of the general and particular governments, is one of the results and beauties of our admirable, though complex system of government. The general government has the use of the capital, court-houses, prisons, and penitentiaries, in the several states. Do they, therefore, cease to appertain to the states? It is to be borne in mind, that although the state banks may occasionally be used by the federal authority, their legal responsibility to the several states remains unimpaired. They continue to be accountable to them, and their existence can only be terminated or prolonged by the state authority. And being governed, as they are, by corporate authority, emanating from, and amenable to, state jurisdiction, and not under the control of the executive of the United States, constitutes at once a greater security for the public money, and more safety to the public liberty. It has been argued that a separation of the government from the banks will diminish the executive power. It must be admitted that the custody of the public money in various banks, subject to the control of state authority, furnishes some check upon the possible abuses of the executive government. But the argument maintains, that the executive has least power when it has most complete possession of the public treasury! The senator from South Carolina contends that the separation in question being once effected, the relation of the federal government and the state banks will be antagonistical. I believe so,Mr.President. That is the very thing I wish to prevent. I want them to live in peace, harmony, and friendship. If they are antagonists, how is it possible that the state banks can maintain their existence against the tremendous influence of this government? Especially, if this government should be backed by such a vast treasury bank, as I verily believe this bill is intended to create! And what becomes of the argument urged by the senator from South Carolina, and the abolition resolutions offered by him at an early period of the session, asserting that the general government is bound to protect the domestic institutions of the several states?
The substitute is not, I think, what the welfare of the country requires. It may serve the purpose of a good half-way house. Its accommodations appear fair; and, with the feelings of a wearied traveller, one may be tempted to stop awhile, and refresh himself there. I shall vote for it as an amendment to the bill, because I believe it the least of two evils, if it should, indeed, inflict any evil; or rather, because I feel myself in the position of a patient, to whom the physician presents, in one hand, a cup of arsenic, and, in the other, a cup of ptisan: I reject the first, because of the instantdeath with which it is charged; I take the latter, as being, at the most, harmless, and depend upon thevis medicatrix natura. It would have been a great improvement, in my opinion, if the mode of bringing about the resumption of specie payments, contained in the substitute, were reversed: that is to say, if instead of fixing on the first of July for resumption, it had provided that the notes of a certain number of safe, sound, and unquestionable banks to be selected, should be forthwith received, by the general government, in payment of all public dues; and that, if the selected banks did not resume, by a future designated day, their notes should cease to be taken. Several immediate effects would follow: first, the government would withdraw from the market as a competitor with the banks for specie, and they would be left undisturbed to strengthen themselves. And, secondly, confidence would be restored, by taking off the discredit, and discountenance thrown upon all banks by the government. And why should these notes not be so received? They are as good as treasury notes, if not better. They answer all the purposes of the state governments and the people. They now would buy as much as specie could have commanded at the period of suspension. They could be disbursed by the government. And, finally, the measure would be temporary.
But the true and only efficacious and permanent remedy, I solemnly believe, is to be found in a bank of the United States, properly organized and constituted. We are told that such a bank is fraught with indescribable danger; and that the government must, in the sequel, get possession of the bank, or the bank of the government. I oppose to these imaginary terrors the practical experience of forty years. I oppose to them the issue of the memorable contest, commenced by the late president of the United States, against the late bank of the United States. The administration of that bank had been without serious fault. It had given no just offence to the government, towards which it had faithfully performed every financial duty. Under its able and enlightened president, it had fulfilled every anticipation which had been formed by those who created it. President Jackson pronounced the edict that it must fall, and it did fall, against the wishes of an immense majority of the people of the United States; against the convictions of its utility entertained by a large majority of the states; and to the prejudice of the best interests of the whole country. If an innocent, unoffending, and highly beneficial institution could be thus easily destroyed by the power of one man, where would be the difficulty of crushing it, if it had given any real cause for just animadversion? Finally, I oppose to these imaginary terrors the example deducible from English history. There a bank has existed since the year 1694, and neither has the bank got possession of the government, nor the government of the bank. They haveexisted in harmony together, both conducing to the prosperity of that great country; and they have so existed, and so contributed, because each has avoided cherishing towards the other that wanton and unnecessary spirit of hostility which was unfortunately engendered in the bosom of the late president of the United States.
I am admonished, sir, by my exhausted strength, and by, I fear, your more exhausted patience, to hasten to a close.Mr.President, a great, novel, and untried measure, is perseveringly urged upon the acceptance of congress. That it is pregnant with tremendous consequences, for good or evil, is undeniable, and admitted by all. We firmly believe that it will be fatal to the best interests of this country, and ultimately subversive of its liberties. You, who have been greatly disappointed in other measures of equal promise, can only hope, in the doubtful and uncertain future, that its operation may prove salutary. Since it was first proposed at the extra session, the whole people have not had an opportunity of passing in judgment upon it at their elections. As far as they have, they have expressed their unqualified disapprobation. From Maine to the state of Mississippi, its condemnation has been loudly thundered forth. In every intervening election, the administration has been defeated, or its former majorities neutralized. Maine has spoken; New York, Pennsylvania, Maryland, Ohio, Rhode Island, Mississippi, and Michigan, all these states, in tones and terms not to be misunderstood, have denounced the measure. The key-stone state (God bless her) has twice proclaimed her rejection of it; once at the polls, and once through her legislature. Friends and foes of the administration have united in condemning it. And, at the very moment when I am addressing you, a large meeting of the late supporters of the administration, headed by the distinguished gentleman who presided in the electoral college which gave the vote of that patriotic state to president Van Buren, are assembling in Philadelphia, to protest solemnly against the passage of this bill. Is it right that, under such circumstances, it should be forced upon a reluctant but free and intelligent people? Is it right that this senate, constituted as it now is, should give its sanction to the measure? I say it in no disrespectful or taunting sense, but we are entitled, according to the latest expressions of the popular will, and in virtue of manifestations of opinion, deliberately expressed by state legislatures, to a vote of thirty-five against the bill; and I am ready to enter, with any senator friendly to the administration, into details to prove the assertion. Will the senate, then, bring upon itself the odium of passing this bill? I implore it to forbear, forbear, forbear! I appeal to the instructed senators. Is this government made for us, or for the people and the states whose agents we are? Are we not bound so to administer it as to advance their welfare, promote their prosperity, and give general satisfaction? Will that sacred trust be fulfilled, if the known sentiments of largeand respectable communities are despised and contemned by those whom they have sent here? I call upon the honorable senator from Alabama, (Mr.King,) with whom I have so long stood in the public councils, shoulder to shoulder, bearing up the honor and the glory of this great people, to come now to their rescue. I call upon all the senators; let us bury deep and for ever the character of the partisan, rise up patriots and statesmen, break the vile chains of party, throw the fragments to the winds, and feel the proud satisfaction that we have made but a small sacrifice to the paramount obligations which we owe our common country.