[THE independent, or sub-treasury scheme, (or a plan for the
collection of the revenue in specie,) being again pressed upon
congress at this session by the president, (Van Buren,) Mr. Clay,
notwithstanding his previous participation in the discussion of
the subject when it was before congress, in the following lucid
and elaborate speech sets forth the pernicious effects of the
proposed measure to be produced upon the currency, commerce,
and industry of the nation. The bill, however, passed the senate
by a vote of twenty-four to eighteen, and after a long contest,
also in the house of representatives, in July, 1840, by a vote
of one hundred and twenty-four to one hundred and seven. It was
repealed in August, 1841.]
I HAVE been desirous, Mr. President, before the passage of this bill,
not to make a speech, but to say a few words about it. I have come to
the senate to-day unaffectedly indisposed, from a serious cold, and
in no condition to address this body; but I regard this bill as so
pregnant with injurious, and dangerous, and direful consequences, that
I cannot reconcile it to a sense of duty to allow it finally to pass
without one last, although unavailing effort against it. I am aware
that the decree for its passage has gone forth; a decree of urgency,
too; so urgent that a short postponement of the consideration of the
measure, to admit of the filling of vacant seats in the senate by
legislative bodies now in session――seats which have remained vacant,
not by the fault of the people, but from the inability of those bodies
to agree in the choice of senators――has been refused by the vote of
the senate; refused, scornfully refused, although, whether the bill
be transmitted two or three weeks sooner or later to the house of
representatives, owing to its unorganized condition, and its known
habits of business, will not expedite its passage a single hour!
Refused by the concurrence of senators who, not representing on this
subject the present sentiments and opinions of their respective states,
seem unwilling to allow the arrival of those who would fully and fairly
represent them!
It is remarkable, sir, that, judging from the vote on the engrossment
of the bill for a third reading, it is to be hurried through the senate
by less than a majority of the body. And if the two senators from
Tennessee had clung to their seats with the same tenacity with which
other senators adhere to theirs, who would have been instructed to
vote against the bill, and are violating their instructions; and if
the senate were full, the vacant seats being filled, as we have every
reason to believe they will be filled; there would be a clear majority
against the passage of the bill. Thus is this momentous measure, which
both its friends and foes unite in thinking will exert a tremendous,
if not revolutionary influence upon the business and concerns of the
country――a measure which has so long and so greatly distracted and
divided our councils, and against which the people have so often and so
signally pronounced their judgment――to be forced through the senate of
the United States.
Mr. President, it is no less the duty of the statesman than of the
physician to ascertain the exact state of the body to which he is to
minister before he ventures to prescribe any healing remedy. It is
with no pleasure, but with profound regret, that I survey the present
condition of our country. I have rarely, I think never, known a period
of such universal and intense interest. The general government is
in debt, and its existing revenue is inadequate to meet its ordinary
expenditure. The states are in debt, some of them largely in debt,
insomuch that they have been compelled to resort to the ruinous
expedient of contracting new loans to meet the interest on prior loans;
and the people are surrounded with difficulties, greatly embarrassed,
and involved in debt. Whilst this is, unfortunately, the general state
of the country, the means of extinguishing this vast mass of debt are
in constant diminution. Property is falling in value; all the great
staples of the country are declining in price, and destined, I fear,
to further decline. The certain tendency of this very measure is to
reduce prices. The banks are rapidly decreasing the amount of their
circulation. About one half of them, extending from New Jersey to
the extreme southwest, have suspended specie payments, presenting
an image of a paralytic, one moiety of whose body is stricken with
palsy. The banks are without a head; and instead of union, concert, and
coöperation between them, we behold jealousy, distrust, and enmity. We
have no currency whatever possessing uniform value throughout the whole
country. That which we have, consisting almost entirely of the issues
of banks, is in a state of the utmost disorder, insomuch that it varies,
in comparison with the specie standard, from par to fifty per centum
discount. Exchanges, too, are in the greatest possible confusion;
not merely between distant parts of the union, but between cities and
places in the same neighborhood; that between our great commercial
marts of New York and Philadelphia, within five or six hours of each
other, vacillating between seven and ten per centum. The products
of our agricultural industry are unable to find their way to market
from the want of means in the hands of traders to purchase them, or
from the want of confidence in the stability of things; many of our
manufactories stopped or stopping, especially in the important branch
of woollens; and a vast accumulation of their fabrics on hand, owing
to the destruction of confidence, and the wretched state of exchange
between different sections of the union.
Such is the unexaggerated picture of our present condition; and amidst
the dark and dense cloud that surrounds us, I perceive not one gleam
of light. It gives me nothing but pain to sketch the picture. But duty
and truth require that existing diseases should be fearlessly examined
and probed to the bottom. We shall otherwise be utterly incapable of
conceiving or applying appropriate remedies. If the present unhappy
state of our country had been brought upon the people by their folly
and extravagance, it ought to be borne with fortitude, and without
complaint, and without reproach. But it is my deliberate judgment
that it has not been; that the people are not to blame, and that
the principal causes of existing embarrassments are not to be traced
to them. Sir, it is not my purpose to waste the time or excite the
feelings of members of the senate by dwelling long on what I suppose
to be those causes. My object is a better, a higher, and I hope a
more acceptable one――to consider the remedies proposed for the present
exigency. Still, I should not fulfil my whole duty if I did not briefly
say, that, in my conscience, I believe our pecuniary distresses have
mainly sprung from the refusal to recharter the late bank of the United
States; the removal of the public deposits from that institution; the
multiplication of state banks in consequence, and the treasury stimulus
given to them to extend their operations; the bungling manner in which
the law depositing the surplus treasure with the states was executed;
the treasury circular; and, although last, perhaps not least, the
exercise of the power of the veto on the bill for distributing among
the states the net proceeds of the sale of the public lands.
What, Mr. President, is needed, at the present crisis, to restore
the prosperity of the people? A sound local currency, mixed with
a currency possessing uniform value throughout the whole country, a
reëstablishment of regular exchanges between different parts of the
union, and a revival of general confidence. The people want, in short,
good government at Washington, the abandonment of rash and ruinous
experiments, the practice here of economy, and the pursuit of the safe
lights of experience. Give us these, and the growth of our population,
the enterprise of our people, and the abundance, variety, and richness
of the products of our soil, and of our industry, with the blessing of
Providence, will carry us triumphantly through all our complicated
embarrassments. Deny these, persevere in a mal-administration of
government, and it is in vain that the bounties of heaven are profusely
scattered around us.
There is one man, and I lament to say, from the current of events
and the progress of executive and party power, but one man at present
in the country, who can bring relief to it, and bind up the bleeding
wounds of the people. He, of all men in the nation, ought to feel as
a parent should feel, most sensibly, the distresses and sufferings of
his family. But looking to his public course, and his official acts,
I am constrained to say, that he surveys unconcerned the wide-spread
ruin, and bankruptcy, and wretchedness before him, without emotion and
without sympathy. Whilst all the elements of destruction are at work,
and the storm is raging, the chief magistrate, standing in the midst of
his unprotected fellow-citizens, on the distinguished position of honor
and confidence to which their suffrages have devoted him, deliberately
wraps around himself the folds of his India-rubber cloak, and lifting
his umbrella over his head, tells them, drenched and shivering as they
are under the beating rain and hail and snow falling upon them, that he
means to take care of himself and the official corps, and that they are
in the habit of expecting too much from government, and must look out
for their own shelter, and security, and salvation!
And now allow me to examine, and carefully and candidly consider
the remedy which this bill offers to a suffering people, for the
unparalleled distresses under which they are writhing. I will first
analyse and investigate it, as its friends and advocates represent
it. What is it? What is this measure which has so long and so deeply
agitated this country, under the various denominations of sub-treasury,
independent treasury, and divorce of the state from banks? What is it?
Let us define it truly and clearly. Its whole principle consists in an
exaction from the people of specie, in the payment of all their dues to
government, and disbursement of specie by the government in the payment
of all salaries, and of all the creditors of the government. This is
its simple and entire principle. Divest the bill under consideration of
all its drapery and paraphernalia, this is its naked, unvarnished, and
unexaggerated principle, according to its own friends. This exclusive
use of specie, in all receipts and payments of the government, it is
true, is not to be instantaneously enforced; but that is the direct and
avowed aim and object of the measure, to be accomplished gradually, but
in the short space of a little more than three years. The twenty-eight
sections of the bill, with all its safes, and vaults, and bars, and
bolts, and receivers-general, and examiners, have nothing _more nor
less_ in view than the exaction of specie from the people, and the
subsequent distribution of that specie among the officers of the
government, and the creditors of the government. It does not touch,
nor profess to touch, the actual currency of the country. It leaves the
local banks where it found them, unreformed, uncontrolled, unchecked
in all their operations. It is a narrow, selfish, heartless measure.
It turns away from the people, and abandons them to their hard
and inexorable fate; leaving them exposed to all the pernicious
consequences of an unsound currency, utterly irregular and disordered
exchanges, and the greatest derangement in all business. It is worse;
it aggravates and perpetuates the very evils which the government
will not redress: for, by going into the market and creating a new and
additional demand for specie, it cripples and disables the state banks,
and renders them incapable of furnishing that relief to the people
which a parental government is bound to exert all its energies and
powers to afford. The divorce of the state from banks, of which its
friends boast, is not the only separation which it makes; it is a
separation of the government from the constituency; a disunion of the
interests of the servants of the people, from the interests of the
people.
This bill, then, is wholly incommensurate with the evils under which
the country is suffering. It leaves them not only altogether unprovided
for, but aggravates them. It carries no word of cheering hope or
encouragement to a depressed people. It leaves their languishing
business in the same state of hopeless discouragement.
But its supporters argue that such a system of convertible paper as
this country has so long had is radically wrong; that all our evils are
to be traced to the banks; and that the sooner they are put down, and a
currency exclusively metallic is established, the better. They further
argue, that such a metallic currency will reduce inflated prices, lower
the wages of labor, enable us to manufacture cheaper, and thereby admit
our manufacturers to maintain a successful competition with foreigners.
And all these results, at some future time or other, are to be brought
about by the operation of this measure.
Mr. President, in my opinion, a currency purely metallic, is neither
desirable, in the present state of the commercial world, nor, if it
were, is it practicable, or possible to be attained in this country.
And if it were possible, it could not be brought about without the
most frightful and disastrous consequences, creating convulsion, if
not revolution.
Of all conditions of society, that is most prosperous in which there is
a gradual and regular increase of the circulating medium, and a gradual,
but not too rapid increase in the value of property, and the price of
commodities. In such a state of things, business of all kinds is active
and animated, every department of it flourishes, and labor is liberally
rewarded. No sacrifices are made of property, and debtors find, without
difficulty, the means of discharging promptly their debts. Men hold
on to what they have, without the apprehension of loss, and we behold
no glutted markets. Of all conditions of society, that is most adverse
in which there is a constant and rapid diminution of the amount of the
circulating medium. Debtors become unable to pay their debts, property
falls, the market is glutted, business declines, and labor is thrown
out of employment. In such a state of things, the imagination goes
ahead of the reality. Sellers become numerous, from the apprehension
that their property, now falling, will fall still lower; and purchasers
scarce, from an unwillingness to make investments with the hazard of
almost certain loss.
Have gentlemen reflected upon the consequences of their system of
depletion? I have already stated, that the country is borne down by
a weight of debt. If the currency be greatly diminished, as beyond all
example it has been, how is this debt to be extinguished? Property, the
resource on which the debtor relied for his payment, will decline in
value, and it may happen that a man, who honestly contracted debt,
on the faith of property which had a value at the time fully adequate
to warrant the debt, will find himself stripped of all his property,
and his debt remain unextinguished. The gentleman from Pennsylvania,
(Mr. Buchanan,) has put the case of two nations, in one of which the
amount of its currency shall be double what it is in the other, and, as
he contends, the prices of all property will be doubled in the former
nation of what they are in the latter. If this be true of two nations,
it must be equally true of one, whose circulating medium is at one
period double what it is at another. Now, as the friends of the bill
argue, we have been, and yet are in this inflated state; our currency
has been double, or, in something like that proportion, of what was
necessary, and we must come down to the lowest standard. Do they not
perceive that inevitable ruin to thousands must be the necessary
consequence? A man, for example, owning property to the value of five
thousand dollars, contracts a debt for five thousand dollars. By the
reduction of one half of the currency of the country, his property
in effect becomes reduced to the value of two thousand five hundred
dollars. But his debt undergoes no corresponding reduction. He gives up
all his property, and remains still in debt two thousand five hundred
dollars. Thus this measure will operate on the debtor class of the
nation, always the weaker class, and that which, for that reason, most
needs the protection of government.
But if the effect of this hard-money policy upon the debtor class be
injurious, it is still more disastrous, if possible, on the laboring
classes. Enterprise will be checked or stopped, employment will
become difficult, and the poorer classes will be subject to the
greatest privations and distresses. Heretofore it has been one of
the pretensions and boasts of the dominant party, that they sought to
elevate the poor by depriving the rich of undue advantages. Now their
policy is, to reduce the wages of labor, and this is openly avowed;
and it is argued by them, that it is necessary to reduce the wages
of American labor to the low standard of European labor, in order to
enable the American manufacturer to enter into a successful competition
with the European manufacturer in the sale of their respective fabrics.
Thus is this dominant party perpetually changing, one day cajoling the
poor, and fulminating against the rich; and the next, cajoling the rich,
and fulminating against the poor. It was but yesterday that we heard
that all who were trading on borrowed capital, ought to break. It was
but yesterday we heard denounced the long established policy of the
country, by which, it was alleged, the poor were made poorer, and the
rich were made richer.
Mr. President, of all the subjects of national policy, not one
ought to be touched with so much delicacy as that of the wages, in
other words, the bread, of the poor man. In dwelling, as I have often
done, with inexpressible satisfaction upon the many advantages of our
country, there is not one that has given me more delight than the high
price of manual labor. There is not one which indicates more clearly
the prosperity of the mass of the community. In all the features of
human society, there are none, I think, which more decisively display
the general welfare, than a _permanent_ high rate of wages, and a
_permanent_ high rate of interest. Of course, I do not mean those
excessive high rates, of temporary existence, which result from
sudden and unexpected demands for labor or capital, and which may, and
generally do, evince some unnatural and extraordinary state of things;
but I mean a settled, steady, and durable high rate of wages of labor,
and interest upon money. Such a state demonstrates activity and profits
in all the departments of business. It proves that the employer can
afford to give high wages to the laborer, in consequence of the profits
of his business, and the borrower high interest to the lender, in
consequence of the gain which he makes by the use of capital. On the
contrary, in countries where business is dull and languishing, and all
the walks of society are full, the small profits that are made will not
justify high interest or high wages.
Wages of labor will be low where there is no business, and of
course, but little or no demand for labor; or where, from a density
of population, the competition for employment is great, and the demand
for labor is not equal to the supply. Similar causes will tend to the
reduction of the rate of interest. Our vast unpeopled regions in the
west, protect us against the evils of a too crowded population. In our
country, such is the variety of profitable business and pursuits, that
there is scarcely any in which one can engage with diligence, integrity,
and ordinary skill, in regular and ordinary times, that he is not sure
of being amply rewarded. Surveying our happy condition in this respect,
it was, during the last war, remarked by the present lord Jeffries,
that America was the heaven of the poor man, and the hell of the rich.
There was extravagance in the observation, mixed with some truth. It
would have been more accurate to have said, that, with good government,
it was an earthly heaven, both of the rich and poor.
It is contended, however, that the reduction of wages would be only
nominal; that an exclusive specie currency being established, the
prices of all commodities would fall; and that the laborer would be
able to command as many of the necessaries of life with his low wages,
as he can at present.
The great error of senators on the other side is, that they do not
sufficiently regard the existing structure of society, the habits
and usages which prevail; in short, the actual state of things. All
wise legislation should be founded upon the condition of society as
it is, and even where reform is necessary, it should be introduced
slowly, cautiously, and with a careful and vigilant attention to all
consequences. But gentlemen seem disposed to consider themselves at
liberty to legislate for a new people, just sprung into existence,
and commencing its career――one for which they may, without reference
to what they see all around them, speculate and theorize at pleasure.
Now if we were such a people, and were deliberating on the question of
what was the best medium of circulation to represent the property, and
transact the business of the country, it is far from being certain that
it would be deemed wisest to adopt an exclusive specie standard. But
when we glance at society as it actually exists, with all its relations
and ramifications, its engagements, debts, wants, habits, customs,
nothing can be more unwise, it seems to me, than to attempt so radical
a change as that which is contemplated.
I cannot admit that the laborer, with his low wages, would be in
as eligible a situation as he now is; the argument excludes all
consideration of his condition, during the transition from the paper,
to the specie medium. In the descending process, from an abundant to
a scarce circulation, there would be nothing before him but distress
and wretchedness; and he would be in the greatest danger of starvation,
before the El Dorado of gentlemen was reached. The adjustment of prices
to the state of the currency, is not so sudden a work as is imagined.
Long after the specie standard should be established, the old prices
of many articles would remain; and all foreign productions, which enter
into the consumption of the poor man, would continue unaffected by our
domestic currency, if it be true, that there would be no alteration
in the condition of the laborer, if he would really get as much, in
_value_, in the new state of things as in the old, how is that of the
capitalist, engaged in manufactures, to be improved? Would not his
situation also remain unaltered? The assumption, that an exclusive hard
money circulation is best for the laborer, best for the manufacturer,
best for the country, is against all the experience of the world.
Beyond all doubt, England is the most prosperous of all the nations
of the old world, and England is the greatest paper money country that
exists. Her manufactures find a market in every portion of the globe;
her operatives and laborers are paid better, and fed better, than any
in Europe. Have the manufactures of the hard money countries of the
continent, prevailed over those of England, and driven them out of the
markets, in fair competition? Far from it. Their policy is to exclude,
by prohibitions and heavy duties, the entry of British goods into
their ports. England has sought to make treaties with them all, and
especially with France, upon the basis of free trade, and France has
replied, that her manufactures are too much behind those of England to
admit of their being placed upon a footing of equality. Paper money,
inflated England, manufactures about two thirds of all the cotton
exported from the United States; and her cotton manufacture alone, is
probably greater than that of all the rest of Europe.
But, Mr. President, if the banishment from circulation of all bank
paper, and the exclusive use of specie in this country were desirable,
is it practicable, can it be possibly brought about? I have said
that the legislator is bound to have due regard to the wants, wishes,
necessities, and condition of the country for which he acts. But a
practical American statesman has a further duty to perform; that of
attentively considering the distribution of the power of government
in this confederacy. Here we have local governments for the respective
states, and general government for the whole. The general government
has but few, limited, and well defined powers, the states severally
possessing all power not denied to them, or delegated by the federal
constitution. Whatever difference of opinion might exist, if it
were a new question, it cannot now be controverted, that each of the
twenty-six state governments has the power to bring into existence
as many banks as it pleases. Banks have accordingly been created, and
will continue, and must exist, in spite of the general government. The
paper of banks will, therefore, remain, as it has been, a part of the
general circulation, in defiance of any policy which this government
may proclaim. And if one or more of the states were to adopt the hard
money policy, there would be others which would find, in the very
forbearance of certain members of the confederacy to establish or
continue banks, a fresh motive to create and sustain them; for the
issues of their banks would run into the states which had them not, and
they would thus appropriate to themselves, at the expense of others,
all the benefits of banking. I recollect well how banks were originally
first introduced into many of the southern and western states. They
found themselves exposed to all the inconveniences, without enjoying
the benefits, of the banking system; and they were reduced to the
necessity of establishing banks, to share the advantages, as well as
the disadvantages, of the system.
Banks, bank notes, a convertible paper money, are, therefore,
inevitable. There is no escape from them. You may deliver as many
homilies as you please, send forth from this capitol as many essays
and disquisitions as you think proper, circulate president’s messages
denouncing them as widely as you choose, and thunder forth from a party
press, as loud and as long as you can, against banks, and they will
continue to exist in spite of you. What, then, is it the duty of a wise,
practical, federal statesman to do? Since he finds a state of things
which is unalterable, to which he must submit, however convinced he
may be of the utility of a change, his duty is to _accommodate_ his
measures to this immutable state of public affairs. And, if he cannot
trust the eight or nine hundred local banks which are dispersed through
the country, create a federal bank, amenable to the general government,
subject to its inspection and authority, and capable of supplying
a general currency worthy of its confidence; make, in short, the
government of the whole partake of the genius, and conform to the
fixed character, of the party.
Mr. President, I never have believed that the local banks were
competent to supply such a general currency, of uniform value, as this
people wants, or to perform those financial offices which are necessary
to a successful administration of this government. I pronounced them
incompetent, at the period of the removal of the deposits; and we
foretold the unfortunate state of things that now exist. But the party
in power, which now denounce them, proclaimed their entire ability,
not only to supply as good, but a better currency, than that which
was furnished by the bank of the United States, and to perform all the
financial duties which that institution fulfilled. After that party had
succeeded in putting down the bank of the United States, and got their
system of state banks into full operation, it continued, year after
year, to announce to the public that all its expectations had been
fully realized.
A bank of the United States established by this government would not
only furnish it a currency in which it might safely confide, in all
receipts and payments, and execute every financial office, but it would
serve as a sentinel; a cement, and a regulator to the state banks. The
senator from Pennsylvania has urged that the present bank of the United
States of Pennsylvania, has a charter more extensive than that of the
late bank of the United States; that it is, in fact, the old bank with
a new charter; and that, with all its vast resources and means, it has
been not only unable to act as a regulator of the local banks, but was
recently the first to set the pernicious example of a suspension of
specie payments.
Mr. President, can the distinguished senator be serious in his
description of these attributes of the Pennsylvania bank? Surely he
must have intended that part of his speech for some other theatre. In
the first place, Pennsylvania, besides sundry other onerous conditions
of loans and subscriptions to objects of internal improvements, levied
upon the present bank, in the form of bonus, some four or five millions
of dollars. Then the general government has withdrawn from it the
seven millions of stock which it held in the old bank――a circumstance
which I have no doubt has tended to cripple its operations. And it is
wholly without the deposits of the government, which the former bank
possessed. Instead of being an ally, the general government has been
in the relation of an enemy to it. And it has had to encounter all the
enmity of a powerful party, within the bosom of the commonwealth. So
far from assuming the office of a regulator of the local banks, its
late distinguished president, upon whose authority the senator relies
for proof of the extent and liberality of its new charter, expressly
declared that it had ceased to be a general agent, and had retired
within the circle of its state duties. So far from having derived any
strength from its connection with the late bank of the United States,
there cannot be a doubt that that connection rendered it far less
efficient than it would have been, if it had gone into operation with
an unencumbered capital, freshly subscribed, of thirty-five millions of
dollars.
To guard against all misconception or misrepresentation, I repeat, what
I said on a former occasion, that, although I am convinced, thoroughly
convinced, that this country cannot get along well without a bank of
the United States, I have no thought of proposing such a bank, and
have no wish to see it proposed by any other, until it is demanded by
a clear and undisputed majority of the people of the United States.
Seeing that a bank of the United States could not be established, two
years ago, I expressed my willingness to make an experiment with the
state banks, rather than resort to this perilous measure. And now,
such are my deep convictions of the fatal tendency of this project of a
sub-treasury, that I would greatly prefer the employment of the agency
of state banks. But whilst I should entertain hopes of their success,
I confess that I should not be without strong apprehensions of their
failure. My belief is, that the state banks would be constantly exposed
to disorder and derangement, without the coöperation of a bank of
the United States; and that our banking system will only be safe and
complete, when we shall have both a bank of the United States, and
state banks.
We are told by the president of the United States, in his message at
the opening of the session, that a great moneyed power exists in London,
that exerts a powerful influence on this country that it is the result
of the credit system; and that every bank established in a remote
village in this country, becomes bound to that power by a cord, which
it touches at its pleasure.
There is, sir, some truth in this representation, and every genuine
American must feel it with shame and regret. It is a melancholy
fact, that the arrival of steam vessels in the port of New York, from
England, is looked for with more curiosity and interest, on account
of the financial intelligence which they bear from London and the bank
of England, than the arrival of the mail from congress. Our people
have been taught, by sad experience, to expect nothing good from
the councils of their own country, and turn their attention towards
the operations in a foreign country. Was this eager inquiry into the
transactions of the bank of England made during the existence of the
bank of the United States? No sir, no sir. You denounced this bank
as a monster, destroyed it; and you have thrown us into the jaws of a
foreign-monster, which we can neither cage nor control. You tore from
us our best shield against the bank of England, and now profess to be
surprised at the influence which it exercises upon our interests! We
do not find that the continental nations of Europe, that have national
banks, complain of the influence of the bank of England upon them. On
the contrary, the bank of England has recently been compelled to apply
to the bank of France for a large sum of specie to sustain its credit
and character.
But, sir, we must look to higher and much more potent causes than the
operations of any bank, foreign or domestic, for the lively interest
which is felt in this country, in the monetary transactions of England.
In England, the credit system, as it is called, exists in a much more
extensive degree than in this country; and, if it were true of the
nature of that system, as is alleged, to render one country dependent
upon another, why should not England be more dependent upon us, than
we upon England? The real cause of our dependence arises out of the
unfavorable balance of our foreign trade. We import too much, and
export too little. We buy too much abroad, make too little at home. If
we would shake off this degrading foreign dependence, we must produce
more, or buy less. Increase our productions, in all the variety of
forms in which our industry can be employed; augment the products of
our soil, extend our manufactures, give new stimulus to our tonnage and
fishing interests, sell more than we buy, get out of debt and keep out
of debt to the foreigner, and he will no longer exert an influence upon
our destiny.
And this unfavorable balance of our foreign trade is wholly independent
of, and unconnected with, the nature of the character of the currency
of the country, whether it be exclusively metallic, or mixed with paper
and the precious metals. England, in a great measure, by means of that
credit or paper system, now so much denounced, has become the centre of
the commerce, the exchanges, and the moneyed operations of the world.
By the extent, variety, and perfection of her manufactures, she lays
most nations that admit them freely, under contribution to her. And
if we had no currency but specie, we should be just as much exposed
to the moneyed power of London, or, which is the true state of the
case, to the effects of an unfavorable balance of trade, as we now are.
We should probably be more so; because a large portion of the specie
of the country being in the vaults of a few depositaries, it would
be easier then to obtain it for exportation, in the operations of
commerce, than now, when it is dispersed among nine hundred or a
thousand banks. What was our condition during the colonial state,
when, with the exception of small amounts of government paper money,
we had no currency but specie, and no banks? Were we not constantly
and largely in debt to England? Was not our specie perpetually drained
to obtain supplies of British goods? Do you not recollect that the
subject of the British debts formed one of those matters which were
embraced in the negotiations and treaty of peace, which terminated
the revolutionary war? And that it was a topic of angry and protracted
discussion long after, until it was finally arranged by Mr. Jay’s
treaty of 1794?
Look into the works of Doctor Franklin, in which there is more
practical good sense to be found, than is to be met with in the same
compass any where. He was the agent of Pennsylvania, from about the
middle of the last century until the breaking out of the revolutionary
war, and a part of the time the agent, also, of the colonies of Georgia,
and Massachusetts. His correspondence shows, that the specie of the
colonies was constantly flowing from them for the purchase of British
goods, insomuch that the colonies were left absolutely destitute of a
local currency; and one of the main objects of his agency was to obtain
the sanction of the parent country to those issues of paper money,
which the necessities of Pennsylvania compelled her to make. The issue
was strenuously opposed by the merchants engaged in the American trade,
on account of the difficulty which it created in making collections and
remittances home. So great was that drain of specie, that we know that
Virginia and other colonies were constrained to adopt tobacco as a
substitute for money.
The principal cause, therefore, of the influence of the moneyed power
of London over this country, is to be found in the vast extent of our
dealings with her. The true remedy is, to increase our manufactures
and purchase less of hers, and to augment our exports by all the means
in our power, and to diminish our imports as much as possible. We must
increase our productions, or economise much more than we have done.
New Jersey, before the revolution, being much pressed for one hundred
thousand pounds sterling, Doctor Franklin proposed a plan, by which she
could in one year make up that sum. The plan was this; she was in the
habit of importing annually from England merchandise to the amount of
two hundred thousand pounds. He recommended that the ladies should buy
only half the amount of silks, calicoes, teas, and so forth, during the
year, which they had been in the habit of consuming; and in this way by
saving, the colony would make the required sum of one hundred thousand
pounds. If we would, for a few years, import only half the amount from
England that we have been in the habit of doing, we should no longer
feel the influence of the London money power.
Mr. President, gentlemen, in my humble opinion, utterly deceive
themselves, in supposing that this measure is demanded by a majority
of the people of the United States, and in alleging that this is
proved by the result of elections of the past year. That there were a
vast majority of them opposed to it was demonstrated incontestably by
previous elections. The elections of last year did not in many, perhaps
most instances, turn at all upon the merits of this measure. In several
states the people were deceived by assurances that the sub-treasury was
at an end, and would be no longer agitated. In others, the people had
reason to be dissatisfied with the conduct of their banks; and they
were artfully led to believe this bill would supply a corrective of the
errors of the banking system. And where they have apparently yielded
their assent to the bill, it has been that sort of assent which the
patient yields, whose constitution has been exhausted and destroyed
by the experiments of empiricism, and who finally consents to take
the last quack medicine offered to him in the hope of saving his
life. I know the people of the United States well. They are ever
ready cheerfully to submit to any burden demanded by the interest, the
honor, or the glory of their country. But what people ever consented
to increase their own burdens unnecessarily? The effect of this measure
is, by exacting specie exclusively from the people, and paying it out
to the official corps and the public creditor, to augment the burdens
of the people, and to swell the emoluments of office. It is an insult
to the understanding and judgment of the enlightened people of the
United States, to assert that they can approve such a measure.
No true patriot can contemplate the course of the party in power
without the most painful and mortified feelings. They began some
years ago their war on the bank of the United States. It was dangerous
to liberty; it had failed to fulfil the purposes of its institution;
it did not furnish a sound currency, although the sun, in all its
course, never shone upon a better. In short, it was a monster, which
was condemned to death, and it was executed accordingly. During the
progress of that war, the state banks were the constant theme of
praise, in speech and song, of the dominant party. They were the best
institutions in the world, free from all danger to public liberty,
capable of carrying on the exchanges of the country, and of performing
the financial duties to government, and of supplying a far better
currency for the people than the bank of the United States. We told
you that the state banks would not do, without the coöperation of a
bank of the United States. We told you that you would find them a weak
league; a mere fleet of open boats tied together by a hickory withe,
and which the first storm would disperse and upset. But you scorned all
our warnings, and continued, year after year, to puff and praise the
operations of these banks. You had the boldness, in the face of this
abused nation, to aver that the country had been supplied by them with
a better currency, and better exchanges, than it had been by the bank
of the United States. Well, by your own measures, by your treasury
circular, distribution of the surplus, and so forth, you accelerated
the catastrophe of the suspension of the banks. You began with promises
to the people of a better currency, better times, more security to
civil liberty; and you end with no currency at all, the worst possible
times, an increase of executive power, and a consequent increase of
danger to civil liberty. You began with promises to fill the pockets
of the people, and you end by emptying theirs and filling your own.
I now proceed, sir, to the object which constituted the main purpose
of my rising at this time. I have hitherto considered the bill, as its
friends in the senate represent it, as a measure simply for exacting
specie, keeping it in the custody of officers of the government, and
disbursing it in a course of administration. I mean now to show that,
whatever its friends here may profess or believe, the bill lays the
foundations, deep and broad, of a government bank――a treasury bank,
under the sole management of the president. Let us first define a bank.
It may have three faculties, separately, or combined; the faculty of
issues, entering into and forming a part of the circulating medium of
the country; that of receiving deposits, and that of making discounts.
Any one of these three faculties makes it a bank; and by far the most
important of the three, is that of the power of issues. That this bill
creates a bank of issues, I most sincerely believe, and shall now
attempt to prove; and the proof will be first extraneous, and secondly
intrinsic.
As to the extraneous proof, I rely upon the repeated declarations
of the late president of the United States, in his annual messages.
On more than one occasion, he stated the practicability of
establishing a bank on the revenue of the government, and to be
under the superintendence of the secretary of the treasury. And
when he vetoed the charter of the late bank of the United States, he
expressly declared, that, if congress had applied to him, he could have
furnished the scheme of a bank, free from all constitutional objections;
doubtless meaning a treasury bank. The present chief magistrate and the
present secretary of the treasury have also, repeatedly, in language,
in their messages and reports, characteristically ambiguous, it is
true, but sufficiently intelligible, intimated the facilities which
the commerce and business of the country would derive from the drafts
issued by the treasury in virtue of this bill. The party, its press,
and its leaders, have constantly put this sub-treasury scheme in
competition with a bank of the United States, and contended that
the issue was sub-treasury or bank of the United States. But how can
they be compared, or come in competition with each other, if the most
important function of a bank of the United States――that of supplying a
medium of general circulation and uniform value――is not to be performed
under this bill?
I pass to the more important, and, I think, conclusive proof,
supplied by the provisions themselves of the bill. After providing
that all money paid to government for duties, public lands, and other
dues, shall be deposited with the treasurer of the United States, the
receivers-general; and the mints, the tenth section enacts:
‘That it shall be lawful for the secretary of the treasury
to transfer the moneys in the hands of any depositary hereby
constituted, to the treasury of the United States; to the mint
at Philadelphia; to the branch mint at New Orleans; or to the
offices of either of the receivers-general of public moneys,
by this act directed to be appointed; to be there safely kept,
according to the provisions of this act; and also to transfer
moneys in the hands of any one depositary constituted by
this act, to any other depositary constituted by the same,
at his discretion, and as the safety of the public moneys,
and the convenience of the public service, shall seem to him
to require; which authority to transfer the moneys belonging
to the post-office department is also hereby conferred upon
the postmaster-general, so far as its exercise by him may be
consistent with the provisions of existing laws; and every
depositary constituted by this act, shall keep his account
of the moneys paid to or deposited with him, belonging to the
post-office department, separate and distinct from the account
kept by him of other public moneys so paid or deposited. And for
the purpose of payments on the public account, it shall be lawful
for the treasurer of the United States to draw upon any of the
said depositaries, as he may think most conducive to the public
interests, or to the convenience of the public creditors, or
both.’
Thus is the secretary invested with unlimited authority to transfer
the public money from one depositary to another, and to concentrate
it all, if he pleases, at a single point. But, without this provision,
the city of New York necessarily must be the place at which the largest
portion of the public money will be constantly in deposit. It collects
alone about two thirds of the duties on imports, and is becoming, if
it be not already, the money centre of the United States. It is not
indispensable, to create a bank of issues, that the place of issue and
the place of payment should be identical. The issue of the paper may
be at one city, and the place of payment may be a different and even
distant city. Nor is the form of the paper material, so as to carry it
into the general circulation of the money of the country. Whether it be
in the shape of bank notes, bank checks, post-notes, or treasury drafts,
is of no consequence. If there be confidence in it, and the paper be
of convenient amount, passes by delivery, and entitles the holder to
demand the specie upon its face, at his pleasure, it will enter into
the general circulation; and the extent of its circulation will be
governed by the amount issued, and the confidence which it enjoys.
I presume that no one will contest these principles. Let us apply them
to the provisions of this bill. The last clause of the tenth section,
already cited, declares:
‘And for the purpose of payments on the public account, it shall
be lawful for the treasurer of the United States to draw upon
any of the said depositaries _as he_ may think most _conducive_
to the public interests, or to the _convenience_ of the public
creditors, or both.’
Here is no restriction whatever as to the amount or form of the draft.
There is nothing to prevent his making it for one hundred dollars, or
fifty dollars, or ten dollars. There is nothing to prevent the use of
bank paper; and the draft will have the number of signatures usual to
bank paper. It will or may be signed by the treasurer, register, and
comptroller.
Now, sir, let me suppose that a citizen has a demand upon the
government for five thousand dollars, and applies to the treasurer for
payment. On what receiver-general will you, he will be asked, have the
amount? On the receiver-general at New York? In what sum? One half of
the sum in drafts of one hundred dollars, and the other in drafts of
fifty dollars. The treasurer cannot lawfully decline furnishing the
required drafts. He is bound by law to consult the _convenience_ of
the public creditor. The drafts are given to him. What will he do with
them? There is not a spot in the whole circumference of the United
States, in which these drafts will not command a premium, or be at
par. Every where to the south and west of New York they will command
a premium of from one fourth to two and a half per centum. Every where
east and north, they will be at par. What, I again ask, will the holder
do with them? Will he commit the indiscretion or folly of cashing these
drafts, and expose himself to the hazard and inconvenience of losing
or carrying the specie about him? No such thing. Being every where
better than or equal to specie, he will retain the drafts, and carry
them with him to his home, and use them in his business. What I have
supposed likely to be done by one, will be done by every creditor of
the government. These drafts, to a considerable extent, will remain
out, enter the general circulation, and compose a part of the common
currency of the country, commanding, at particular places, as notes
of the bank of the United States have done, and now do, a premium, but
any where being certainly good for the amount on their face. All this
is perfectly plain and inevitable; and the amount of this element of
government drafts, in the general currency of the country, will be
somewhat governed by the amount of the annual disbursements of the
government. In the early administration of this treasury bank, its
paper will command general and implicit confidence. It will be as much
better than the paper of the bank of the United States or the bank of
England, as the resources of the United States are superior to those
of any mere private corporation. Sub-treasurers and receivers-general
may fly with the public money committed to their charge; may peculate
or speculate as they please, and, unlike the condition of banks, whose
fraudulent officers squander the means of those institutions, the
nation remains bound for the redemption of all paper issued under its
authority. But the paper of the late bank of the United States acquired
a confidence every where, more or less, in and out of the United States.
It was received in Canada, in Europe, and at Canton. The government
drafts upon receivers-general will have a much more sure and extensive
circulation. Who will doubt their payment? Who will question the honor
and good faith of the United States in their redemption? The bankers
of Europe, the Rothschilds and the Barings, will receive them without
hesitation, and prefer them to the specie they represent, whenever the
rate of exchange is not decidedly against this country, because they
can be more safely and conveniently kept than specie itself. And with
respect to our state banks, the treasury drafts will form the basis
of their operations. They will be preferred to specie, because they
will be more convenient, and free from the hazards incident to the
possession of specie. The banks will require no more specie than the
wants of the community for change make necessary.
Thus, sir, will these government drafts, or bank notes, as they may be
called, remain out in circulation. The issues of the first year, under
appropriations of the public revenue, will be followed by the issues
of succeeding years. More and more will it be perceived to be needless
and indiscreet to cash them; and more and more will the specie of the
country accumulate in the custody of the receivers-general, until,
after a few years, the greater part of the specie of the country will
be found in the vaults of the depositaries, represented by an equal
amount of government paper in circulation. I can conceive of no case
or motive, but one, for withdrawing the specie from the vaults of
the depositaries, and that is, when, from an unfavorable state of our
foreign trade, the course of foreign exchange is much against us; and
then this system will furnish great facilities to the export of the
precious metals.
In process of time, it will be seen, as was observed with respect to
the bank of Amsterdam, that there is a much larger amount of specie in
deposit with the receivers-general, than is likely to be called for by
the paper representing it in circulation, in the common transactions
of the business and commerce of the country; and what has been done
before, will be done again. Government in a time of necessity, will be
tempted to increase its paper issues upon the credit of this dormant
specie capital. It will be tempted again and again to resort to this
expedient, since it is easier to make emissions of paper, than to lay
the burden of taxation on the people. The history of American paper
money, during the revolution, of French assignats, and of government
banks, throughout the world, tells the whole tale, and gives you the
denouement.
But we shall be informed, as has been insisted, that this bill
cautiously guards against the degeneracy of the system into a
government bank, by the provision contained in the twenty-third
section, enjoining the secretary of the treasury ‘to issue and publish
regulations to enforce the speedy presentation of all government drafts
for payment at the places where payable; and to prescribe the time,
according to the different distances of the depositaries from the seat
of government, within which all drafts upon them respectively, shall be
presented for payment; and in default of such presentation, to direct
any other mode and place of payment which _he may deem proper_.’
Then it is to depend upon the secretary of the treasury whether we have
a government bank or not! We are delivered over to the tender mercies
of his legislation, in the form of the regulations which he may choose
to issue and publish! And the extraordinary power is vested in him, if
any dare violate _his_ regulations, of denouncing the severe penalty
of receiving payment ‘in any _other mode_ and place which he may
deem proper.’ Now, sir, between a draft on the receivers-general at
St. Louis, and at New York, there will be a difference at all times of
at least two per centum; and at some periods a much greater difference.
Is it fitting; is it in accordance with the genius of free institutions,
with the spirit of a country of laws, to confide such a power to a mere
secretary of the treasury? What a power is it not to reward political
friends or punish political enemies.
But, sir, I look at the matter of this restriction in a higher point
of view. You cannot maintain it; why should you? You have provided
all the means, as you profess to believe, of perfect security for the
custody of the public money in these public depositories. Why should
you require the holder of a government draft, often ignorant of the
legislation of the secretary of the treasury, to present it for payment
by a given day, under a severe penalty depending upon his _discretion_?
Will not the inconvenience to the community, of a precise day and a
short day, for the presentation of the draft, be vastly greater than
that of the public in retaining the money for an indefinite day, until
it suits the holder’s convenience to demand payment? And will you
not be tempted to keep possession of the specie for the incidental
advantages which it affords? Ah! sir; are we to overlook the possible
uses to which, in corrupt days of the republic, this dormant specie
maybe applied in the crisis of a political election, or the crisis
of the existence of a party in power? Congress will be called upon,
imperatively called upon, by the people, to abolish all restrictions
which the secretary of the treasury may promulgate for the _speedy_
presentation for payment of government drafts. The wants of the people,
and the necessity of the country for a paper medium, possessing a
uniform value, and capable of general circulation, will demand it at
your hands, and you will be most ready to grant the required boon. We
should regard the system according to its true and inherent character,
and not be deceived by provisions, inevitably temporary in their
nature, which the policy or the prudence of its authors may throw
around it. The greatest want of this country, at the present period,
in its circulating medium, is some convertible paper, which, at every
extremity of the union, will command the confidence of the public, and
circulate without depreciation. Such a paper will be supplied in the
form of these government drafts.
But if the restriction which I have been considering could be enforced
and continued, it would not alter the bank character of this measure.
Bank or no bank, is a question not depending upon the duration of
time which its issues remain out, but upon the _office_ which they
perform whilst _out_. The notes of the bank of the United States of
Pennsylvania are not deprived of their character of composing a part of
the circulating medium of the country, although they might be returned
to the bank in some ten or twenty days after their issue.
I know that it has been argued, and will be argued again, that at all
times, since the commencement of the government, the practice of the
treasury has been, to issue its drafts upon the public depositaries;
that these drafts have not heretofore circulated as money; and that
if they now do, it is an incident which attaches no blame to the
government.
But heretofore these drafts were issued upon banks, and the holders of
them passed to their credit with the banks or received payment in bank
notes. The habit of the country――and habit was a great thing――was to
use bank notes. Moreover, there were bank notes of every kind in use;
those which were local and those which were general in their credit
and circulation. Now, having no bank of the United States in existence,
there are no bank notes which maintain the same value, and command
the public confidence, throughout the union. You create, therefore,
an inexorable necessity for the use of government drafts as a medium
of general circulation, and argue from a state of things when no such
necessity existed!
The protestation of the friends of the bill in this chamber, the
denunciations of its opponents, and the just horror which the people
entertain of a government bank, may prompt the secretary of the
treasury, slowly and slyly, to lift the veil which masks its true
features. A government bank may not suddenly burst upon us, but _there_
it is, embodied in _this_ bill; and it is not the least objection to
the measure that it depends upon the discretion of a secretary of the
treasury to retard or accelerate the commencement of its operation
at his pleasure. Let the reëlection of the present chief magistrate
be secured, and you will soon see the bank disclosing its genuine
character. But, thanks be to God, there is a day of reckoning at hand.
All the signs of the times clearly indicate its approach; and on the
fourth day of March, in the year of our Lord 1841, I trust that the
long account of the abuses and corruptions of this administration, in
which this measure will be a conspicuous item, will be finally and for
ever adjusted.
Mr. President, who is to have the absolute control of this government
bank? We have seen, within a few years past, a most extraordinary
power asserted and exercised. We have seen in a free, representative,
republican government, the power claimed by the executive, and it
is now daily enforced, of dismissing all officers of the government
without any other cause than a mere difference of opinion. No matter
what may be the merits of the officer; no matter how long and how
faithfully he may have served the public; no matter what sacrifices he
may have made; no matter how incompetent from age and poverty, he may
be to gain a subsistence for himself and family, he is driven out to
indigence and want for no other reason than that he differs in opinion
with the president on the sub-treasury, or some other of the various
experiments upon the prosperity of this people. But this is not all;
if you call upon the president to state the reasons which induced
him, in any particular instance, to exercise this tremendous power
of dismission, wrapping himself up in all the dignity and arrogance
of royal majesty, he refuses to assign any reason whatever, and tells
you it is his prerogative! that you have no right to interrogate him
as to the motives which have prompted him in the exercise of any of
his constitutional powers! Nay, more; if you apply to a subordinate――a
mere minion of power――to inform you why _he_ has dismissed any of _his_
subordinates, he replies, that he will not communicate the grounds of
his action. I have understood that in more cases than one, the person
acting as postmaster-general, has refused, this session, to inform
members of congress of the grounds on which _he_ has dismissed deputy
postmasters. We have witnessed the application of this power to a
treasurer of the United States recently, without the pretence of his
failure to discharge his public duties, all of which he performed with
scrupulous exactness, honor, and probity.
And what, sir, is the consequence of a power so claimed, and so
exercised? The first is, that, in a country of constitution and laws,
the basis and genius of which are, that there is and should be the
most perfect responsibility on the part of every, even the highest
functionary, here is a vast power, daily exercised with the most
perfect impunity, and without the possibility of arraigning a guilty
chief magistrate. For how can he be impeached or brought to trial if he
will not disclose, and you have no adequate means of ascertaining the
grounds on which he has acted?
The next consequence is, that as all the officers of government, who
hold their offices by the tenure to which I allude, hold them at the
president’s mercy, and without the possibility of finding any redress,
if they are dismissed without cause, they become his pliant creatures,
and feel that they are bound implicitly to obey his will.
Now, sir, put this government bank into operation, and who are to be
charged with the administration of its operations? The secretary of
the treasury, the treasurer of the United States, the register and
comptroller of the treasury, and the receivers-general, and so forth;
every one of them holding his office at the pleasure and mercy of the
president; every one of them, perhaps, depending for his bread upon
the will of the president; every one of them taught, by sad experience,
to know that his safest course is to mould his opinions, and shape
his conduct, so as to please the president; every one of them knowing
perfectly, that, if dismissed, he is without the possibility of any
remedy or redress whatever. In such a deplorable state of things, this
government bank will be the mere bank of the president of the United
States. He will be the _president, cashier, and teller_. Yes, sir, this
complete subjection of all the subordinate officers of the government
to the will of the president, will make him sole director, president,
cashier, and teller of this government bank. The so much dreaded
union of the purse and the sword will at last be consummated, and the
usurpation, by which the public deposits, in 1837, were removed by
the advancement of the one, and the removal of another secretary of
the treasury, will not only be finally legalized and sanctioned, but
the enormity of the danger of that precedent will be transcended by
a deliberate act of the congress of the United States!
Mr. President, for ten long years we have been warring against
the alarming growth of executive power; but, although we have been
occasionally cheered, it has been constantly advancing, and never
receding. You may talk as you please about bank expansions. There has
been no pernicious expansion in this country like that of executive
power; and, unlike the operations of banks, this power never has
any periods of contraction. You may denounce, as you please, the
usurpations of congress. There has been no usurpation but that of
the executive, which has been both of the powers of other coördinate
departments of this government, and upon the states. There scarcely
remains any power in this government but that of the president. He
suggests, originates, controls, checks every thing. The insatiable
spirit of the Stuarts, for power and prerogative, was brought upon our
American throne on the fourth of March, 1829. It came under all the
usual false and hypocritical pretences and disguises, of love of the
people, desire of reform, and diffidence of power. The Scotch dynasty
still continues. We have had Charles the first, and now we have Charles
the second. But I again thank God, that our deliverance is not distant;
and that, on the fourth of March, 1841, a great and glorious revolution,
without blood and without convulsion, will be achieved.