REVIVAL OF THE GOLD CURRENCY--MR. BENTON'S SPEECH.
Mr. Benton said it was now six years since he had begun to oppose
the renewal of the charter of this bank, but he had not, until the
present moment, found a suitable occasion for showing the people the
kind of currency which they were entitled to possess, and probably
would possess, on the dissolution of the Bank of the United States.
This was a view of the subject which many wished to see, and which
he felt bound to give; and which he should proceed to present, with
all the brevity and perspicuity of which he was master.
1. In the first place, he was one of those who believed that the
government of the United States was intended to be a hard money
government: that it was the intention, and the declaration of the
constitution of the United States, that the federal currency should
consist of gold and silver; and that there is no power in Congress
to issue, or to authorize any company of individuals to issue, any
species of federal paper currency whatsoever.
Every clause in the constitution, said Mr. B., which bears upon the
subject of money--every early statute of Congress which interprets
the meaning of these clauses--and every historic recollection which
refers to them, go hand in hand, in giving to that instrument the
meaning which this proposition ascribes to it. The power granted to
Congress to coin money is an authority to stamp metallic money, and
is not an authority for emitting slips of paper containing promises
to pay money. The authority granted to Congress to regulate the
value of coin, is an authority to regulate the value of the metallic
money, not of paper. The prohibition upon the States against
making any thing but gold and silver a legal tender, is a moral
prohibition, founded in virtue and honesty, and is just as binding
upon the federal government as upon the State governments; and that
without a written prohibition; for the difference in the nature of
the two governments is such, that the States may do all things which
they are not forbid to do; and the federal government can do nothing
which it is not authorized by the constitution to do. The power to
punish the crime of counterfeiting is limited to the current coin
of the United States, and to the securities of the United States;
and cannot be extended to the offence of forging paper money, but by
that unjustifiable power of construction which founds an implication
upon an implication, and hangs one implied power upon another. The
word currency is not in the constitution, nor any word which can
be made to cover a circulation of bank notes. Gold and silver is
the only thing recognized for money. It is the money, and the only
money, of the constitution; and every historic recollection, as
well as every phrase in the constitution, and every early statute
on the subject of money, confirms that idea. People were sick of
paper money about the time that this constitution was formed. The
Congress of the confederation, in the time of the Revolution, had
issued a currency of paper money. It had run the full career of
that currency. The wreck of two hundred millions of paper dollars
lay upon the land. The framers of that constitution worked in the
midst of that wreck. They saw the havoc which paper money had made
upon the fortunes of individuals, and the morals of the public. They
determined to have no more federal paper money. They created a hard
money government; they intended the new government to recognize
nothing for money but gold and silver; and every word admitted into
the constitution, upon the subject of money, defines and establishes
that sacred intention.
Legislative enactment, continued Mr. B., came quickly to the aid
of constitutional intention and historic recollection. The fifth
statute passed at the first session of the first Congress that
ever sat under the present constitution, was full and explicit on
this head. It defined the kind of money which the federal treasury
should receive. The enactments of the statute are remarkable
for their brevity and comprehension, as well as for their clear
interpretation of the constitution; and deserve to be repeated
and remembered. They are: That the fees and duties payable to the
federal government shall be received in gold and silver coin only;
the gold coins of France, Spain, Portugal, and England, and all
other gold coins of equal fineness, at eighty-nine cents for every
pennyweight; the Mexican dollar at one hundred cents; the crown of
France at one hundred and eleven cents; and all other silver coins
of equal fineness, at one hundred and eleven cents per ounce. This
statute was passed the 30th day of July, 1789--just one month after
Congress had commenced the work of legislation. It shows the sense
of the Congress composed of the men, in great part, who had framed
the constitution, and who, by using the word only, clearly expressed
their intention that gold and silver alone was to constitute the
currency of the new government.
In support of this construction of the constitution, Mr. B. referred
to the phrase so often used by our most aged and eminent statesmen,
that this was intended to be a hard money government. Yes, said
Mr. B., the framers of the constitution were hard money men; but
the chief expounder and executor of that constitution was not a
hard money man, but a paper system man! a man devoted to the paper
system of England, with all the firmness of conviction, and all
the fervor of enthusiasm. God forbid, said Mr. B., that I should
do injustice to Gen. Hamilton--that I should say, or insinuate,
aught to derogate from the just fame of that great man! He has many
titles to the gratitude and admiration of his countrymen, and the
heart could not be American which could dishonor or disparage his
memory. But his ideas of government did not receive the sanction of
general approbation; and of all his political tenets, his attachment
to the paper system was most strongly opposed at the time, and has
produced the most lasting and deplorable results upon the country.
In the year 1791, this great man, then Secretary of the Treasury,
brought forward his celebrated plan for the support of public
credit--that plan which unfolded the entire scheme of the paper
system, and immediately developed the great political line between
the federalists and the republicans. The establishment of a national
bank was the leading and predominant feature of that plan; and the
original report of the Secretary, in favor of establishing the bank,
contained this fatal and deplorable recommendation:
"The bills and notes of the bank, originally made payable, or which
shall have become payable, on demand, in gold and silver coin, shall
be receivable in all payments to the United States."
This fatal recommendation became a clause in the charter of the
bank. It was transferred from the report of the Secretary to
the pages of the statute book; and from that moment the moneyed
character of the federal government stood changed and reversed.
Federal bank notes took the place of hard money; and the whole
edifice of the new government slid, at once, from the solid rock of
gold and silver money, on which its framers had placed it, into the
troubled and tempestuous ocean of a paper currency.
Mr. B. said it was no answer to this most serious charge of having
changed the moneyed character of the federal government, and of
the whole Union, to say that the notes of the Bank of the United
States are not made a legal tender between man and man. There
was no necessity, he said, for a statute law to that effect; it
was sufficient that they were made a legal tender to the federal
government; the law of necessity, far superior to that of the
statute book, would do the rest. A law of tender was not necessary;
a forced, incidental tender, resulted as an inevitable consequence
from the credit and circulation which the federal government
gave them. Whatever was received at the custom-houses, at the
land-offices, at the post-offices, at the marshals' and district
attorneys' offices, and in all the various dues to the federal
government, must be received and will be received by the people.
It becomes the actual and practical currency of the land. People
must take it, or get nothing; and thus the federal government,
establishing a paper currency for itself, establishes it also for
the States and for the people; and every body must use it from
necessity, whether compelled by law or not.
Mr. B. said it was not to be supposed that the objection which he
now took to the unconstitutionality of the clause which made the
notes of the federal bank a legal tender to the federal government,
was an objection which could be overlooked, or disregarded, by
the adversaries of the bank in 1791. It was not overlooked, or
disregarded; on the contrary, it was denounced, and combated, as in
itself a separate and distinct breach of the constitution, going
the whole length of emitting paper money; and the more odious and
reprehensible because a privileged company was to have the monopoly
of the emission. The genius of Hamilton was put in requisition
to answer this objection; and the best answer which that great
man could give it, was a confession of the omnipotence of the
objection, and the total impossibility of doing it away. His answer
surrendered the whole question of a currency. It sunk the notes of
the bank, which were then to be tendered to the federal government,
to the condition of supplies furnished to the government, and
to be consumed by it. The answer took refuge under the natural
power, independent of all constitutions, for the tax receiver to
receive his taxes in what articles he pleased. To do justice to
General Hamilton, and to detect and expose the true character
of this bank paper, Mr. B. read a clause from Gen. Hamilton's
reply to the cabinet opinions of Mr. Jefferson, and the Attorney
General Randolph, when President Washington had the charter of
the first bank under advisement with his Secretaries. It was the
clause in which General Hamilton replied to the objection to the
constitutionality of making the notes of the bank receivable in
payment of public dues. "To designate or appoint the money or thing
in which taxes are to be paid, is not only a proper, but a necessary
exercise of the power of collecting them. Accordingly, Congress,
in the law concerning the collection of the duties, imposts, and
tonnage, has provided that they shall be payable in gold and silver.
But, while it was an indispensable part of the work to say in what
they should be paid, the choice of the specific thing was a mere
matter of discretion. The payment might have been required in the
commodities themselves. Taxes in kind, however ill judged, are not
without precedents, even in the United States; or it might have
been in the paper money of the several States; or in the bills
of the Bank of North America, New-York, and Massachusetts, all,
or either of them; it might have been in bills issued under the
authority of the United States. No part of this, it is presumed,
can be disputed. The appointment of the money or thing in which the
taxes are to be paid, is an incident of the power of collection. And
among the expedients which may be adopted, is that of bills issued
under the authority of the United States." Mr. B. would read no
further, although the argument of General Hamilton extended through
several pages. The nature of the argument is fully disclosed in
what is read. It surrenders the whole question of a paper currency.
Neither the power to furnish a currency, or to regulate currency,
is pretended to be claimed. The notes of the new bank are put upon
the footing, not of money, but of commodities--things--articles in
kind--which the tax receiver may accept from the tax payer; and
which are to be used and consumed by the tax receiver, and not to be
returned to the people, much less to be diffused over the country in
place of money. This is the original idea and conception of these
notes. It is the idea under which they obtained the legal capacity
of receivability in payment of public dues; and from this humble
conception, this degraded assimilation to corn and grain, to clothes
and provisions, they have, by virtue of that clause in the charter,
crept up to the character of money--become the real, practical
currency of the land--driven the currency of the constitution from
the land--and so depraved the public intellect as now to be called
for as money, and proclaimed to be indispensable to the country,
when the author of the bank could not rank it higher than an
expedient for paying a tax.
2. In the next place, Mr. B. believed that the quantity of specie
derivable from foreign commerce, added to the quantity of gold
derivable from our own mines, were fully sufficient, if not expelled
from the country by unwise laws, to furnish the people with an
abundant circulation of gold and silver coin, for their common
currency, without having recourse to a circulation of small bank
notes.
The truth of these propositions, Mr. B. held to be susceptible of
complete and ready proof. He spoke first of the domestic supply
of native gold, and said that no mines had ever developed more
rapidly than these had done, or promised more abundantly than they
now do. In the year 1824 they were a spot in the State of North
Carolina; they are now a region spreading into six States. In the
year 1824 the product was $5,000; in the last year the product,
in coined gold, was $868,000; in uncoined, as much more; and the
product of the present year computed at two millions; with every
prospect of continued and permanent increase. The probability was
that these mines alone, in the lapse of a few years, would furnish
an abundant supply of gold to establish a plentiful circulation
of that metal, if not expelled from the country by unwise laws.
But the great source of supply, both for gold and silver, Mr. B.
said, was in our foreign commerce. It was this foreign commerce
which filled the States with hard money immediately after the close
of the Revolutionary War, when the domestic mines were unknown;
and it is the same foreign commerce which, even now, when federal
laws discourage the importation of foreign coins and compel their
exportation, is bringing in an annual supply of seven or eight
millions. With an amendment of the laws which now discourage the
importation of foreign coins, and compel their exportation, there
could be no delay in the rapid accumulation of a sufficient stock
of the precious metals to supply the largest circulation which the
common business of the country could require.
Mr. B. believed the product of foreign mines, and the quantity
of gold and silver now in existence, to be much greater than was
commonly supposed; and, as a statement of its amount would establish
his proposition in favor of an adequate supply of these metals for
the common currency of the country, he would state that amount, as
he found it calculated in approved works of political economy. He
looked to the three great sources of supply: 1. Mexico and South
America; 2. Europe and Northern Asia; 3. The coast of Africa. Taking
the discovery of the New World as the starting point from which the
calculation would commence, and the product was:
1. Mexico and South America, $6,458,000,000
2. Europe and Northern Asia, 628,000,000
3. The coast of Africa, 150,000,000
--making a total product of seven thousand two hundred and
thirty-six millions, in the short space of three centuries and a
half. To this is to be added the quantity existing at the time the
New World was discovered, and which was computed at $2,300,000,000.
Upon all these data, the political economists, Mr. B. said, after
deducting $2,000,000,000 for waste and consumption, still computed
the actual stock of gold and silver in Europe, Asia, and America, in
1832, at about seven thousand millions of dollars; and that quantity
constantly and rapidly increasing.
Mr. B. had no doubt but that the quantity of gold and silver in
Europe, Asia, and America, was sufficient to carry on the whole
business of the world. He said that states and empires--far greater
in wealth and population than any now existing--far superior in
public and private magnificence--had carried on all the business
of private life, and all the affairs of national government, upon
gold and silver alone; and that before the mines of Mexico and
Peru were known, or dreamed of. He alluded to the great nations of
antiquity--to the Assyrian and Persian empires; to Egypt, Carthage,
Rome; to the Grecian republics; the kingdoms of Asia Minor; and
to the empire, transcending all these put together--the Saracenic
empire of the Caliphs, which, taking for its centre the eastern
limit of the Roman world, extended its dominion as far west as
Rome had conquered, and further east than Alexander had marched.
These great nations, whose armies crushed empires at a blow, whose
monumental edifices still attest their grandeur, had no idea of
bank credits and paper money. They used gold and silver alone. Such
degenerate phrases as sound currency, paper medium, circulating
media, never once sounded in their heroic ears. But why go back,
exclaimed Mr. B., to the nations of antiquity? Why quit our own
day? Why look beyond the boundaries of Europe? We have seen an
empire in our own day, of almost fabulous grandeur and magnificence,
carrying on all its vast undertakings upon a currency of gold and
silver, without deigning to recognize paper for money. I speak,
said Mr. B., of France--great and imperial France--and have my eye
upon that first year of the consulate, when a young and victorious
general, just transferred from the camp to a council, announced to
his astonished ministers that specie payments should commence in
France by a given day!--in that France which, for so many years, had
seen nothing but a miserable currency of depreciated mandats and
assignats! The annunciation was heard with the inward contempt, and
open distrust, which the whole tribe of hack politicians every where
feel for the statesmanship of military men. It was followed by the
success which it belongs to genius to inspire and to command. Specie
payments commenced in France on the day named; and a hard money
currency has been the sole currency of France from that day to this.
Such, said Mr. B., is the currency of France; a country whose taxes
exceed a thousand millions of francs--whose public and private
expenditures require a circulation of three hundred and fifty
millions of dollars--and which possesses that circulation, every
dollar of it, in gold and silver. After this example, can any one
doubt the capacity of the United States to supply itself with
specie? Reason and history forbid the doubt. Reason informs us that
hard money flows into the vacuum the instant that small bank notes
are driven out. France recovered a specie circulation within a year
after the consular government refused to recognize paper for money.
England recovered a gold circulation of about one hundred millions
of dollars within four years after the one and two pound notes were
suppressed. Our own country filled up with Spanish milled dollars,
French crowns, doubloons, half joes, and guineas, as by magic, at
the conclusion of the Revolutionary War, and the suppression of
the continental bills. The business of the United States would not
require above sixty or seventy millions of gold and silver for the
common currency of the people, and the basis of large bank notes
and bills of exchange. Of that sum, more than one third is now in
the country, but not in circulation. The Bank of the United States
hoards above ten millions. At the expiration of her charter, in
1836, that sum will be paid out in redemption of its notes--will go
into the hands of the people--and, of itself, will nearly double
the quantity of silver now in circulation. Our native mines will be
yielding, annually, some millions of gold; foreign commerce will be
pouring in her accustomed copious supply; the correction of the
erroneous value of gold, the liberal admission of foreign coins, and
the suppression of small notes, will invite and retain an adequate
metallic currency. The present moment is peculiarly favorable for
these measures. Foreign exchanges are now in our favor; silver is
coming here, although not current by our laws; both gold and silver
would flow in, and that immediately, to an immense amount, if
raised to their proper value, and put on a proper footing, by our
laws. Three days' legislation on these subjects would turn copious
supplies of gold and silver into the country, diffuse them through
every neighborhood, and astonish gentlemen when they get home at
midsummer, at finding hard money where they had left paper.
3. In the third place, Mr. B. undertook to affirm, as a proposition
free from dispute or contestation, that the value now set upon gold,
by the laws of the United States, was unjust and erroneous; that
these laws had expelled gold from circulation; and that it was the
bounden duty of Congress to restore that coin to circulation, by
restoring it to its just value.
That gold was undervalued by the laws of the United States, and
expelled from circulation, was a fact, Mr. B. said, which every body
knew; but there was something else which every body did not know;
which few, in reality, had an opportunity of knowing, but which was
necessary to be known, to enable the friends of gold to go to work
at the right place to effect the recovery of that precious metal
which their fathers once possessed--which the subjects of European
kings now possess--which the citizens of the young republics to
the South all possess--which even the free negroes of San Domingo
possess--but which the yeomanry of this America have been deprived
of for more than twenty years, and will be deprived of for ever,
unless they discover the cause of the evil, and apply the remedy to
its root.
I have already shown, said Mr. B., that the plan for the support of
public credit which General Hamilton brought forward, in 1791, was
a plan for the establishment of the paper system in our America. We
had at that time a gold currency which was circulating freely and
fully all over the country. Gold is the antagonist of paper, and,
with fair play, will keep a paper currency within just and proper
limits. It will keep down the small notes; for, no man will carry
a five, a ten, or a twenty dollar note in his pocket, when he can
get guineas, eagles, half eagles, doubloons, and half joes to carry
in their place. The notes of the new Bank of the United States,
which bank formed the leading feature in the plan for the support
of public credit, had already derived one undue advantage over
gold, in being put on a level with it in point of legal tender to
the federal government, and universal receivability in all payments
to that government: they were now to derive another, and a still
greater undue advantage over gold, in the law for the establishment
of the national mint; an institution which also formed a feature of
the plan for the support of public credit. It is to that plan that
we trace the origin of the erroneous valuation of gold, which has
banished that metal from the country. Mr. Secretary Hamilton, in his
proposition for the establishment of a mint, recommended that the
relative value of gold to silver should be fixed at fifteen for one;
and that recommendation became the law of the land; and has remained
so ever since. At the same time, the relative value of these metals
in Spain and Portugal, and throughout their vast dominions in the
new world, whence our principal supplies of gold were derived, was
at the rate of sixteen for one; thus making our standard six per
cent. below the standard of the countries which chiefly produced
gold. It was also below the English standard, and the French
standard, and below the standard which prevailed in these States,
before the adoption of the constitution, and which was actually
prevailing in the States, at the time that this new proportion of
fifteen to one was established.
Mr. B. was ready to admit that there was some nicety requisite in
adjusting the relative value of two different kinds of money--gold
and silver for example--so as to preserve an exact equipoise between
them, and to prevent either from expelling the other. There was some
nicety, but no insuperable or even extraordinary difficulty, in
making the adjustment. The nicety of the question was aggravated in
the year '92, by the difficulty of obtaining exact knowledge of the
relative value of these metals, at that time, in France and England;
and Mr. Gallatin has since shown that the information which was then
relied upon was clearly erroneous. The consequence of any mistake
in fixing our standard, was also well known in the year '92. Mr.
Secretary Hamilton, in his proposition for the establishment of a
mint, expressly declared that the consequence of a mistake in the
relative value of the two metals, would be the expulsion of the one
that was undervalued. Mr. Jefferson, then Secretary of State, in his
cotemporaneous report upon foreign coins, declared the same thing.
Mr. Robert Morris, financier to the revolutionary government, in
his proposal to establish a mint, in 1782, was equally explicit to
the same effect. The delicacy of the question and the consequence
of a mistake, were then fully understood forty years ago, when the
relative value of gold and silver was fixed at fifteen to one. But,
at that time, it unfortunately happened that the paper system,
then omnipotent in England, was making its transit to our America;
and every thing that would go to establish that system--every
thing that would go to sustain the new-born Bank of the United
States--that eldest daughter and _spem gregis_ of the paper system
in America--fell in with the prevailing current, and became
incorporated in the federal legislation of the day. Gold, it was
well known, was the antagonist of paper; from its intrinsic value,
the natural predilection of all mankind for it, its small bulk, and
the facility of carrying it about, it would be preferred to paper,
either for travelling or keeping in the house; and thus would limit
and circumscribe the general circulation of bank notes, and prevent
all plea of necessity for issuing smaller notes. Silver, on the
contrary, from its inconvenience of transportation, would favor the
circulation of bank notes. Hence the birth of the doctrine, that if
a mistake was to be committed, it should be on the side of silver!
Mr. Secretary Hamilton declares the existence of this feeling when,
in his report upon the establishment of a mint, he says: "It is
sometimes observed, that silver ought to be encouraged, rather than
gold, as being more conducive to the extension of bank circulation,
from the greater difficulty and inconvenience which its greater
bulk, compared with its value, occasions in the transportation of
it." This passage in the Secretary's report, proves the existence
of the feeling in favor of silver against gold, and the cause of
that feeling. Quotations might be made from the speeches of others
to show that they acted upon that feeling; but it is due to General
Hamilton to say that he disclaimed such a motive for himself, and
expressed a desire to retain both metals in circulation, and even to
have a gold dollar.
The proportion of fifteen to one was established. The 11th section
of the act of April, 1792, enacted that every fifteen pounds weight
of pure silver, should be equal in value, in all payments, with
one pound of pure gold; and so in proportion for less quantities
of the respective metals. This act was the death warrant to the
gold currency. The diminished circulation of that coin soon began
to be observable; but it was not immediately extinguished. Several
circumstances delayed, but could not prevent that catastrophe.
1. The Bank of the United States then issued no note of less
denomination than ten dollars, and but few of them. 2. There were
but three other banks in the United States, and they issued but few
small notes; so that a small note currency did not come directly
into conflict with gold. 3. The trade to the lower Mississippi
continued to bring up from Natchez and New Orleans, for many years,
a large supply of doubloons; and long supplied a gold currency
to the new States in the West. Thus, the absence of a small note
currency, and the constant arrivals of doubloons from the lower
Mississippi, deferred the fate of the gold currency; and it was
not until the lapse of near twenty years after the adoption of the
erroneous standard of 1792, that the circulation of that metal, both
foreign and domestic, became completely and totally extinguished in
the United States. The extinction is now complete, and must remain
so until the laws are altered.
In making this annunciation, and in thus standing forward to expose
the error, and to demand the reform of the gold currency, he (Mr.
B.) was not setting up for the honors of a first discoverer, or
first inventor. Far from it. He was treading in the steps of other,
and abler men, who had gone before him. Four Secretaries of the
Treasury, Gallatin, Dallas, Crawford, Ingham, had, each in their
day, pointed out the error in the gold standard, and recommended
its correction. Repeated reports of committees, in both Houses of
Congress, had done the same thing. Of these reports he would name
those of the late Mr. Lowndes of South Carolina; of Mr. Sanford,
late a senator from New-York; of Mr. Campbell P. White, now a
representative from the city of New-York. Mr. B. took pleasure in
recalling and presenting to public notice, the names of the eminent
men who had gone before him in the exploration of this path. It was
due to them, now that the good cause seemed to be in the road to
success, to yield to them all the honors of first explorers; it was
due to the cause also, in this hour of final trial, to give it the
high sanction of their names and labors.
Mr. B. would arrest for an instant the current of his remarks, to
fix the attention of the Senate upon a reflection which must suggest
itself to the minds of all considerate persons. He would ask how
it could happen that so many men, and such men as he had named,
laboring for so many years, in a cause so just, for an object so
beneficial, upon a state of facts so undeniable, could so long and
so uniformly fail of success? How could this happen? Sir, exclaimed
Mr. B., it happened because the policy of the Bank of the United
States required it to happen! The same policy which required gold
to be undervalued in 1792, when the first bank was chartered, has
required it to be undervalued ever since, now that a second bank
has been established; and the same strength which enabled these
banks to keep themselves up, also enabled them to keep gold down.
This is the answer to the question; and this the secret of the
failure of all these eminent men in their laudable efforts to raise
gold again to the dignity of money. This is the secret of their
failure; and this secret being now known, the road which leads to
the reformation of the gold currency lies uncovered and revealed
before us: it is the road which leads to the overthrow of the Bank
of the United States--to the sepulchre of that institution: for,
while that bank lives, or has the hope of life, gold cannot be
restored to life. Here then lies the question of the reform of the
gold currency. If the bank is defeated, that currency is reformed;
if the bank is victorious, gold remains degraded; to continue an
article of merchandise in the hands of the bank, and to be expelled
from circulation to make room for its five, its ten, and its twenty
dollar notes. Let the people then, who are in favor of restoring
gold to circulation, go to work in the right place, and put down the
power that first put down gold, and which will never suffer that
coin to rise while it has power to prevent it.
Mr. B. did not think it necessary to descant and expatiate upon the
merits and advantages of a gold currency. These advantages had been
too well known, from the earliest ages of the world, to be a subject
of discussion in the nineteenth century; but, as it was the policy
of the paper system to disparage that metal, and as that system,
in its forty years' reign over the American people, had nearly
destroyed a knowledge of that currency, he would briefly enumerate
its leading and prominent advantages. 1. It had an intrinsic value,
which gave it currency all over the world, to the full amount of
that value, without regard to laws or circumstances. 2. It had a
uniformity of value, which made it the safest standard of the value
of property which the wisdom of man had ever yet discovered. 3. Its
portability; which made it easy for the traveller to carry it about
with him. 4. Its indestructibility; which made it the safest money
that people could keep in their houses. 5. Its inherent purity;
which made it the hardest money to be counterfeited, and the easiest
to be detected, and, therefore, the safest money for the people to
handle. 6. Its superiority over all other money; which gave to its
possessor the choice and command of all other money. 7. Its power
over exchanges; gold being the currency which contributes most to
the equalization of exchange, and keeping down the rate of exchange
to the lowest and most uniform point. 8. Its power over the paper
money; gold being the natural enemy of that system, and, with fair
play, able to hold it in check. 9. It is a constitutional currency
and the people have a right to demand it, for their currency, as
long as the present constitution is permitted to exist.
Mr. B. said, that the false valuation put upon gold had rendered the
mint of the United States, so far as the gold coinage is concerned,
a most ridiculous and absurd institution. It has coined, and that
at a large expense to the United States, 2,262,717 pieces of gold,
worth $11,852,890; and where are these pieces now? Not one of them
to be seen! all sold, and exported! and so regular is this operation
that the director of the mint, in his latest report to Congress,
says that the new coined gold frequently remains in the mint,
uncalled for, though ready for delivery, until the day arrives for a
packet to sail to Europe. He calculates that two millions of native
gold will be coined annually hereafter; the whole of which, without
a reform of the gold standard, will be conducted, like exiles, from
the national mint to the sea-shore, and transported to foreign
regions, to be sold for the benefit of the Bank of the United States.
Mr. B. said this was not the time to discuss the relative value of
gold and silver, nor to urge the particular proportion which ought
to be established between them. That would be the proper work of a
committee. At present it might be sufficient, and not irrelevant,
to say that this question was one of commerce--that it was purely
and simply a mercantile problem--as much so as an acquisition of
any ordinary merchandise from foreign countries could be. Gold
goes where it finds its value, and that value is what the laws of
great nations give it. In Mexico and South America--the countries
which produce gold, and from which the United States must derive
their chief supply--the value of gold is 16 to 1 over silver; in
the island of Cuba it is 17 to 1; in Spain and Portugal it is 16
to 1; in the West Indies, generally, it is the same. It is not to
be supposed that gold will come from these countries to the United
States, if the importer is to lose one dollar in every sixteen
that he brings; or that our own gold will remain with us, when an
exporter can gain a dollar upon every fifteen that he carries out.
Such results would be contrary to the laws of trade; and therefore
we must place the same value upon gold that other nations do,
if we wish to gain any part of theirs, or to regain any part of
our own. Mr. B. said that the case of England and France was no
exception to this rule. They rated gold at something less than 16
for 1, and still retained gold in circulation; but it was retained
by force of peculiar laws and advantages which do not prevail in
the United States. In England the circulation of gold was aided
and protected by four subsidiary laws, neither of which exist
here: one which prevented silver from being a tender for more than
forty shillings; another which required the Bank of England to pay
all its notes in gold; a third which suppressed the small note
circulation; a fourth which alloyed their silver nine per cent.
below the relative value of gold. In France the relative proportion
of the two metals was also below what it was in Spain, Portugal,
Mexico, and South America, and still a plentiful supply of gold
remained in circulation; but this result was aided by two peculiar
causes; first, the total absence of a paper currency; secondly, the
proximity of Spain, and the inferiority of Spanish manufactures,
which gave to France a ready and a near market for the sale of her
fine fabrics, which were paid for in the gold of the New World. In
the United States, gold would have none of these subsidiary helps;
on the contrary it would have to contend with a paper currency, and
would have to be obtained, the product of our own mines excepted,
from Mexico and South America, where it is rated as sixteen to one
for silver. All these circumstances, and many others, would have
to be taken into consideration in fixing a standard for the United
States. Mr. B. repeated that there was nicety, but no difficulty,
in adjusting the relative value of gold and silver so as to retain
both in circulation. Several nations of antiquity had done it; some
modern nations also. The English have both in circulation at this
time. The French have both, and have had for thirty years. The
States of this Union also had both in the time of the confederation;
and retained them until this federal government was established, and
the paper system adopted. Congress should not admit that it cannot
do for the citizens of the United States, what so many monarchies
have done for their subjects. Gentlemen, especially, who decry
military chieftains, should not confess that they themselves cannot
do for America, what a military chieftain did for France.
Mr. B. made his acknowledgments to the great apostle of American
liberty (Mr. Jefferson), for the wise, practical idea, that the
value of gold was a commercial question, to be settled by its value
in other countries. He had seen that remark in the works of that
great man, and treasured it up as teaching the plain and ready way
to accomplish an apparently difficult object; and he fully concurred
with the senator from South Carolina [Mr. Calhoun], that gold, in
the United States, ought to be the preferred metal; not that silver
should be expelled, but both retained; the mistake, of any, to be in
favor of gold, instead of being against it.
IV. Mr. B. believed that it was the intention and declared meaning
of the constitution, that foreign coins should pass currently as
money, and at their full value, within the United States; that
it was the duty of Congress to promote the circulation of these
coins by giving them their full value; that this was the design
of the States in conferring upon Congress the exclusive power of
regulating the value of these coins; that all the laws of Congress
for preventing the circulation of foreign coins, and underrating
their value, were so many breaches of the constitution, and so many
mischiefs inflicted upon the States; and that it was the bounden
duty of Congress to repeal all such laws; and to restore foreign
coins to the same free and favored circulation which they possessed
when the federal constitution was adopted.
In support of the first branch of his first position Mr. B.
quoted the words of the constitution which authorized Congress to
regulate the value of foreign coins; secondly, the clause in the
constitution which authorized Congress to provide for punishing
the counterfeiting of current coin, in which term, foreign coin
was included; thirdly, the clause which prohibited the States from
making any thing but gold and silver coin a tender in payment of
debts; a clause which did not limit the prohibition to domestic
coins, and therefore included foreign ones. These three clauses,
he said, were concurrent, and put foreign coin and domestic coin
upon the same precise footing of equality, in every particular
which concerned their current circulation, their value, and their
protection from counterfeiters. Historical recollections were the
next evidence to which Mr. B. referred to sustain his position. He
said that foreign coins were the only coins known to the United
States at the adoption of the constitution. No mint had been
established up to that time. The coins of other nations furnished
the currency, the exclusive metallic currency, which the States had
used from the close of the Revolutionary War up to the formation
of this federal government. It was these foreign coins then which
the framers of the constitution had in view when they inserted
all the clauses in the constitution which bear upon the value and
current circulation of coin; its protection from counterfeiters,
and the prohibitory restriction upon the States with respect to the
illegality of tenders of any thing except of gold and silver. To
make this point still plainer, if plainer it could be made, Mr. B.
adverted to the early statutes of Congress which related to foreign
coins. He had seen no less than nine statutes, passed in the first
four years of the action of this federal government, all enacted
for the purpose of regulating the value, protecting the purity, and
promoting the circulation of these coins. Not only the well-known
coins of the principal nations were provided for in these statutes,
but the coins of all the nations with whom we traded, how rare or
small might be the coin, or how remote or inconsiderable might be
the nation. By a general provision of the act of 1789, the gold
coins of all nations, which equalled those of England, France,
Spain and Portugal, in fineness, were to be current at 89 cents the
pennyweight; and the silver coins of all nations, which equalled
the Spanish dollar in fineness, were to be current at 111 cents
the ounce. Under these general provisions, a great influx of the
precious metals took place; doubloons, guineas, half joes, were
the common and familiar currency of farmers and laborers, as well
as of merchants and traders. Every substantial citizen then kept
in his house a pair of small scales to weigh gold, which are now
used by his posterity to weigh physic. It is a great many years--a
whole generation has grown up--since these scales were used for
their original purpose; nor will they ever be needed again for that
use until the just and wise laws of '89 and '90, for the general
circulation of foreign coins, shall again be put in force. These
early statutes, added to historical recollections, could leave no
doubt of the true meaning of the constitution, and that foreign
coins were intended to be for ever current within the United States.
With this obvious meaning of the constitution, and the undeniable
advantage which redounded to the United States from the acquisition
of the precious metals from all foreign nations, the inquiry
naturally presents itself, to know for what reason these coins
have been outlawed by the Congress of the United States, and
driven from circulation? The inquiring mind wishes to know how
Congress could be brought, in a few short years after the adoption
of the constitution, to contradict that instrument in a vital
particular--to repeal the nine statutes which they had passed in
favor of foreign coin--and to illegalize the circulation of that
coin whose value they were to regulate, and whose purity to protect?
Sir, said Mr. B., I am unwilling to appear always in the same train,
tracing up all the evils of our currency to the same fountain of
mischiefs--the introduction of the paper system, and the first
establishment of a federal bank among us. But justice must have its
sway; historical truth must take its course; facts must be told; and
authentic proof shall supply the place of narrative and assertion.
We ascend, then, to the year '91--to the exhibition of the plan for
the support of public credit--and see in that plan, as one of its
features, a proposition for the establishment of a national mint;
and in that establishment a subsidiary engine for the support of
the federal bank. We have already seen that in the proposition for
the establishment of the mint, gold was largely undervalued; and
that this undervaluation has driven gold from the country and left
a vacuum for the circulation of federal bank notes; we are now to
see that the same mint establishment was to give further aid to
the circulation of these notes, by excluding foreign coins, both
gold and silver, from circulation, and thus enlarging the vacuum
which was to be filled by bank paper. This is what we are now to
see; and to see it, we will look at the plan for the support of
public credit, and that feature of the plan which proposes the
establishment of a national mint.
Mr. B. would remark, that four points were presented in this plan:
1. The eventual abolition of the currency of foreign coins; 2.
The reduction of their value while allowed to circulate; 3. The
substitution of domestic coins; and, 4. The substitution of bank
notes in place of the uncurrent and undervalued foreign coins. Such
were the recommendations of Secretary Hamilton; and legislative
enactments quickly followed to convert his recommendations into
law. The only power the constitution had given to Congress over
foreign coins, was a power to regulate their value, and to protect
them from debasement by counterfeiters. It was certainly a most
strange construction of that authority, first, to underrate the
value of these coins, and next, to prohibit their circulation! Yet
both things were done. The mint went into operation in 1794; foreign
coins were to cease to be a legal tender in 1797; but, at the end of
that time, the contingencies on which the Secretary calculated, to
enable the country to do without foreign coins, had not occurred;
the substitutes had not appeared; the mint had not supplied the
adequate quantity of domestic coin, nor had the circulation of
bank notes become sufficiently familiar to the people to supersede
gold. The law for the exclusion of foreign coins was found to be
impracticable; and a suspension of it for three years was enacted.
At the end of this time the evil was found to be as great as ever;
and a further suspension of three years was made. This third term
of three years also rolled over, the supply of domestic coins was
still found to be inadequate, and the people continued to be as
averse as ever to the bank note substitute. A fourth suspension of
the law became necessary, and in 1806 a further suspension for three
years was made; after that a fifth, and finally a sixth suspension,
each for the period of three years; which brought the period for
the actual and final cessation of the circulation of foreign coins,
to the month of November, 1819. From that time there was no further
suspension of the prohibitory act. An exception was continued,
and still remains, in favor of Spanish milled dollars and parts
of dollars; but all other foreign coins, even those of Mexico and
all the South American States, have ceased to be a legal tender,
and have lost their character of current money within the United
States. Their value is degraded to the mint price of bullion; and
thus the constitutional currency becomes an article of merchandise
and exportation. Even the Spanish milled dollar, though continued
as a legal tender, is valued, not as money, but for the pure silver
in it, and is therefore undervalued three or four per cent. and
becomes an article of merchandise. The Bank of the United States has
collected and sold 4,450,000 of them. Every money dealer is employed
in buying, selling, and exporting them. The South and West, which
receives them, is stripped of them.
Having gone through this narrative of facts, and shown the exclusion
of foreign coins from circulation to be a part of the paper system,
and intended to facilitate the substitution of a bank note currency,
Mr B. went on to state the injuries resulting from the measure.
At the head of these injuries he was bound to place the violation
of the constitution of the United States, which clearly intended
that foreign coins should circulate among us, and which, in giving
Congress authority to regulate their value, and to protect them from
counterfeiters, could never have intended to stop their circulation,
and to abandon them to debasement. 2. He denounced this exclusion
of foreign coins as a fraud, and a fraud of the most injurious
nature, upon the people of the States. The States had surrendered
their power over the coinage to Congress; they made the surrender in
language which clearly implied that their currency of foreign coins
was to be continued to them; yet that currency is suppressed; a
currency of intrinsic value, for which they paid interest to nobody,
is suppressed; and a currency without intrinsic value, a currency
of paper subject to every fluctuation, and for the supply of which
corporate bodies receive interest, is substituted in its place. 3.
He objected to this suppression as depriving the whole Union, and
especially the Western States, of their due and necessary supply of
hard money. Since that law took effect, the United States had only
been a thoroughfare for foreign coins to pass through. All that
was brought into the country, had to go out of the country. It was
exported as fast as imported. The custom-house books proved this
fact. They proved, that from 1821 to 1833, the imports of specie
were $89,428,462; the exports, for the same time, were $88,821,433;
lacking but three quarters of a million of being precisely equal
to the imports! Some of this coin was recoined before it was
exported, a foolish and expensive operation on the part of the
United States; but the greater part was exported in the same form
that it was received. Mr. B. had only been able to get the exports
and imports from 1821; if he could have obtained those of 1820, and
the concluding part of 1819, when the prohibitory law took effect,
the amount would have been about ninety-six millions of dollars;
the whole of which was lost to the country by the prohibitory law,
while much of it would have been saved, and retained for home
circulation, if it had not been for this law. The loss of this great
sum in specie was an injury to the whole Union, but especially to
the Western States, whose sole resource for coin was from foreign
countries; for the coinage of the mint could never flow into that
region; there was nothing in the course of trade and exchanges, to
carry money from the Atlantic States to the West, and the mint,
if it coined thousands of millions, could not supply them. The
taking effect of the law in the year 1819, was an aggravation of
the injury. It was the most unfortunate and ruinous of all times
for driving specie from the country. The Western banks, from their
exertions to aid the country during the war, had stretched their
issues to the utmost limit; their notes had gone into the land
offices; the federal government turned them over to the Bank of the
United States; and that bank demanded specie. Thus, the necessity
for specie was increased at the very moment that the supply was
diminished; and the general stoppage of the Western banks, was the
inevitable and natural result of these combined circumstances.
Having shown the great evils resulting to the country from the
operation of this law, Mr. B. called upon its friends to tell what
reason could now be given for not repealing it? He affirmed that,
of the two causes to which the law owed its origin, one had failed
_in toto_, and the other had succeeded to a degree to make it the
curse and the nuisance of the country. One reason was to induce an
adequate supply of foreign coins to be brought to the mint, to be
recoined; the other to facilitate the substitution of a bank note
currency. The foreign coins did not go to the mint, those excepted
which were imported in its own neighborhood; and even these were
exported nearly as fast as recoined. The authority of the director
of the mint had already been quoted to show that the new coined
gold was transferred direct from the national mint to the packet
ships, bound to Europe. The custom-house returns showed the large
exportation of domestic coins. They would be found under the head
of "Domestic Manufactures Exported;" and made a large figure
in the list of these exports. In the year 1832, it amounted to
$2,058,474, and in the year 1833, to $1,410,941; and every year it
was more or less; so that the national mint had degenerated into a
domestic manufactory of gold and silver, for exportation to foreign
countries. But the coins imported at New Orleans, at Charleston,
and at other points remote from Philadelphia, did not go there to
be recoined. They were, in part, exported direct from the place
of import, and in part used by the people as current money, in
disregard of the prohibitory law of 1819. But the greater part was
exported--for no owner of foreign coin could incur the trouble,
risk, and expense, of sending it some hundred or a thousand miles
to Philadelphia, to have it recoined; and then incurring the same
expense, risk, and trouble (lying out of the use of the money, and
receiving no interest all the while), of bringing it back to be put
into circulation; with the further risk of a deduction for want of
standard fineness at the mint, when he could sell and export it
upon the spot. Foreign coins could not be recoined, so as to supply
the Union, by a solitary mint on the Atlantic coast. The great West
could only be supplied from New Orleans. A branch of the mint,
placed there, could supply the West with domestic coins. Mexico,
since she became a free country, has established seven mints in
different places, because it was troublesome and expensive to carry
bullion from all parts of the country to be coined in the capital;
and when coined there, there was nothing in the course of trade to
carry them back into the country; and the owners of it would not
be at the expense and trouble of carrying it back, and getting it
into circulation, being the exact state of things at present in the
gold mines of the Southern States. The United States, upon the same
principles and for the same reasons, should establish branches of
the mint in the South, convenient to the gold mine region, and at
New Orleans, for the benefit of that city and the West. Without a
branch of the mint at New Orleans, the admission of foreign coins
is indispensable to the West; and thus the interest of that region
joins itself to the voice of the constitution in demanding the
immediate repeal of all laws for illegalizing the circulation of
these coins, and for sinking them from their current value as money,
to their mint value as bullion. The design of supplying the mint
with foreign coins, for recoinage, had then failed; and in that
respect the exclusion of foreign coins has failed in one of its
objects--in the other, that of making room for a substitute of bank
notes, the success of the scheme has been complete, excessive, and
deplorable.
Foreign coins were again made a legal tender, their value regulated
and their importation encouraged, at the expiration of the charter
of the first Bank of the United States. This continued to be
the case until after the present Bank of the United States was
chartered; as soon as that event happened, and bank policy again
became predominant in the halls of Congress, the circulation of
foreign coins was again struck at and, in the second year of the
existence of the bank, the old act of 1793, for rendering these
coins uncurrent, was carried into final and complete effect. Since
that time, the bank has enjoyed all her advantages from this
exclusion. The expulsion of these coins has created a vacuum, to
be filled up by her small note circulation; the traffic and trade
in them has been as large a source of profit to her as of loss to
the country. Gold coin she has sold at an advance of five or six
per cent.; silver coin at about two or three per cent.; and, her
hand being in, she made no difference between selling domestic coin
and foreign coin. Although forbid by her charter to deal in coin,
she has employed her branches to gather $40,040,000 of coin from
the States; a large part of which she admits that she has sold and
transported to Europe. For the sale of the foreign coin, she sets
up the lawyer-like plea, that it is not coin, but bullion! resting
the validity of the plea upon English statute law! while, by the
constitution of the United States, all foreign coins are coin;
while, by her own charter, the coins, both gold and silver, of Great
Britain, France, Spain, and Portugal, and their dominions, are
declared to be coin; and, as such, made receivable in payment of the
specie proportion of the bank stock--and, worse yet! while Spanish
dollars, by statute, remain the current coin of the United States,
the bank admits the sale of 4,450,142 of these identical Spanish
milled dollars!
Mr. B. then took a rapid view of the present condition of the
statute currency of the United States--of that currency which was
a legal tender--that currency with which a debtor had a right by
law to protect his property from execution, and his body from jail,
by offering it as a matter of right, to his creditor in payment of
his debt. He stated this statute currency to be: 1st. Coins from
the mint of the United States; 2dly. Spanish milled dollars, and
the parts of such dollars. This was the sum total of the statute
currency of the United States; for happily no paper of any bank,
State or federal, could be made a legal tender. This is the sum
total out of which any man in debt can legally pay his debt: and
what is his chance for making payment out of this brief list?
Let us see. Coinage from the mint: not a particle of gold, nor a
single whole dollar to be found; very few half dollars, except in
the neighborhood of the mint, and in the hands of the Bank of the
United States and its branches; the twenty, ten, and five cent
pieces scarcely seen, except as a curiosity, in the interior parts
of the country. So much for the domestic coinage. Now for the
Spanish milled dollars--how do they stand in the United States?
Nearly as scarce as our own dollars; for, there has been none coined
since Spain lost her dominion over her colonies in the New World;
and the coinage of these colonies, now independent States, neither
is in law, nor in fact, Spanish milled. That term belongs to the
coinage of the Spanish crown, with a Spanish king's head upon the
face of it; although the coin of the new States, the silver dollars
of Mexico, Central America, Peru, and Chili, are superior to Spanish
dollars, in value, because they contain more pure silver, still they
are not a tender; and all the francs from France, in a word, all
foreign coin except Spanish milled dollars, the coinage of which
has ceased, and the country stripped of all that were in it, by the
Bank of the United States, are uncurrent, and illegal as tenders:
so that the people of the United States are reduced to so small a
list, and so small a supply of statute currency, out of which debts
can legally be paid, that it may be fairly assumed that the whole
debtor part of the community lie at the mercy of their creditors, to
have their bodies sent to jail, or their property sold for nothing,
at any time that their creditors please. To such a condition are
the free and high-minded inhabitants of this country reduced! and
reduced by the power and policy of the first and second Banks of
the United States, and the controlling influence which they have
exercised over the moneyed system of the Union, from the year 1791
down to the present day.
Mr. B. would conclude what he had to say, on this head, with one
remark; it was this: that while the gold and silver coin of all the
monarchs of Europe were excluded from circulation in the United
States, the paper notes of their subjects were received as current
money. The Bank of the United States was, in a great degree, a
foreign institution. Foreigners held a great part of its stock,
and may hold it all. The paper notes issued by this institution,
thus composed in great part of the subjects of European kings,
are made legal tenders to the federal government, and thus forced
into circulation among the people; while the gold and silver coin
of the kings to which they belong, is rejected and excluded, and
expelled from the country! He demanded if any thing could display
the vice and deformity of the paper system in a more revolting and
humiliating point of view than this single fact?
V. Mr. B. expressed his satisfaction at finding so many points
of concurrence between his sentiments on currency, and those of
the senator from South Carolina (Mr. Calhoun). Reform of the gold
currency--recovery of specie--evils of excessive banking--and the
eventual suppression of small notes--were all points in which they
agreed, and on which he hoped they should be found acting together
when these measures should be put to the test of legislative action.
He regretted that he could not concur with that senator on the great
points to which all the others might be found to be subordinate and
accessorial. He alluded to the prolonged existence of the Bank of
the United States! and especially to the practical views which that
senator had taken of the beneficial operation of that institution,
first, as the regulator of the local currencies, and next, as the
supplier of a general currency to the Union. On both these points,
he differed--immeasurably differed--from that senator; and dropping
all other views of that bank, he came at once to the point which the
senator from South Carolina marked out as the true and practical
question of debate; and would discuss that question simply under
its relation to the currency; he would view the bank simply as
the regulator of local currencies and the supplier of a national
currency, and would give his reasons for differing--irreconcilably
differing--from the senator from South Carolina on these points.
Mr. B. took three distinct objections to the Bank of the United
States, as a regulator of currency: 1, that this was a power which
belonged to the government of the United States; 2, that it could
not be delegated; 3, that it ought not be delegated to any bank.
1. The regulation of the currency of a nation, Mr. B. said, was one
of the highest and most delicate acts of sovereign power. It was
precisely equivalent to the power to create currency; for, a power
to make more or less, was, in effect, a power to make much or none.
It was the coining power; a power that belonged to the sovereign;
and, where a paper currency was tolerated, the coining power was
swallowed up and superseded by the manufactory which emitted paper.
In the present state of the currency of the United States, the
federal bank was the mint for issuing money; the federal mint was
a manufactory for preparing gold and silver for exportation. The
States, in the formation of the constitution, gave the coining power
to Congress; with that power, they gave authority to regulate the
currency of the Union, by regulating the value of gold and silver,
and preventing any thing but metallic money from being made a
tender in payment of debts. It is by the exercise of these powers
that the federal government is to regulate the currency of the
Union; and all the departments of the government are required to
act their parts in effecting the regulation: the Congress, as the
department that passes the law; the President, as the authority that
recommends it, approves it, and sees that it is faithfully executed;
the judiciary, as standing between the debtor and creditor, and
preventing the execution from being discharged by any thing but gold
and silver and that at the rate which the legislative department has
fixed. This is the power, and sole power, of regulating currency
which the federal constitution contains; this power is vested in
the federal government, not in one department of it, but in the
joint action of the three departments; and while this power is
exercised by the government, the currency of the whole Union will be
regulated, and the regulation effected according to the intention
of the constitution, by keeping all the local banks up to the point
of specie payment; and thereby making the value of their notes
equivalent to specie.
2. This great and delicate power, thus involving the sacred
relations of debtor and creditor, and the actual rise or fall in the
value of every man's property, Mr. B. undertook to affirm, could
not be delegated. It was a trust from the State governments to the
federal government. The State governments divested themselves of
this power, and invested the federal government with it, and made
its exercise depend upon the three branches of the new government;
and this new government could no more delegate it, than they
could delegate any other great power which they were bound to
execute themselves. Not a word of this regulating power, Mr. E.
said, was heard of when the first bank was chartered, in the year
1791. No person whispered such a reason for the establishment
of a bank at that time; the whole conception is newfangled--an
afterthought--growing out of the very evils which the bank itself
has brought upon the country, and which are to be cured by putting
down that great bank; after which, the Congress and the judiciary
will easily manage the small banks, by holding them up to specie
payments, and excluding every unsolid note from revenue payments.
3. Mr. B. said that the government ought not to delegate this
power, if it could. It was too great a power to be trusted to any
banking company whatever, or to any authority but the highest
and most responsible which was known to our form of government.
The government itself ceased to be independent--it ceases to be
safe--when the national currency is at the will of a company. The
government can undertake no great enterprise, neither of war nor
peace, without the consent and co-operation of that company; it
cannot count its revenues for six months ahead without referring
to the action of that company--its friendship or its enmity--its
concurrence or opposition--to see how far that company will permit
money to be plenty, or make it scarce; how far it will let the
moneyed system go on regularly, or throw it into disorder; how far
it will suit the interests, or policy, of that company to create a
tempest, or to suffer a calm, in the moneyed ocean. The people are
not safe when a company has such a power. The temptation is too
great--the opportunity too easy--to put up and put down prices;
to make and break fortunes; to bring the whole community upon its
knees to the Neptunes who preside over the flux and reflux of
paper. All property is at their mercy. The price of real estate--of
every growing crop--of every staple article in market--is at their
command. Stocks are their playthings--their gambling theatre--on
which they gamble daily, with as little secrecy, and as little
morality, and far more mischief to fortunes, than common gamblers
carry on their operations. The philosophic Voltaire, a century
ago, from his retreat in Ferney, gave a lively description of this
operation, by which he was made a winner, without the trouble of
playing. I have a friend, said he, who is a director in the Bank of
France, who writes to me when they are going to make money plenty,
and make stocks rise, and then I give orders to my broker to sell;
and he writes to me when they are going to make money scarce, and
make stocks fall, and then I write to my broker to buy; and thus,
at a hundred leagues from Paris, and without moving from my chair,
I make money. This, said Mr. B., is the operation on stocks to the
present day; and it cannot be safe to the holders of stock that
there should be a moneyed power great enough in this country to
raise and depress the prices of their property at pleasure. The
great cities of the Union are not safe, while a company, in any
other city, have power over their moneyed system, and are able, by
making money scarce or plenty--by exciting panics and alarms--to
put up, or put down, the price of the staple articles in which
they deal. Every commercial city, for its own safety, should have
an independent moneyed system--should be free from the control and
regulation of a distant, possibly a rival city, in the means of
carrying on its own trade. Thus, the safety of the government, the
safety of the people, the interest of all owners of property--of
all growing crops--the holders of all stocks--the exporters of
all staple articles--require that the regulation of the currency
should be kept out of the hands of a great banking company; that it
should remain where the constitution placed it--in the hands of the
federal government--in the hands of their representatives who are
elected by them, responsible to them, may be exchanged by them, who
can pass no law for regulating currency which will not bear upon
themselves as well as upon their constituents. This is what the
safety of the community requires; and, for one, he (Mr. B.) would
not, if he could, delegate the power of regulating the currency of
this great country to any banking company whatsoever. It was a power
too tremendous to be trusted to a company. The States thought it too
great a power to be trusted to the State governments; he (Mr. B.)
thought so too. The States confided it to the federal government;
he, for one, would confine it to the federal government, and would
make that government exercise it. Above all, he would not confer it
upon a bank which was itself above regulation; and on this point
he called upon the Senate to recollect the question, apparently
trite, but replete with profound sagacity--that sagacity which it
belongs to great men to possess, and to express--which was put to
the Congress of 1816, when this bank charter was under discussion,
and the regulation of the currency was one of the attributes with
which it was to be invested; he alluded to his late esteemed friend
(Mr. Randolph), and to his call upon the House to tell him who was
to bell the cat? That single question contains in its answer, and in
its allusion, the exact history of the people of the United States,
and of the Bank of the United States, at this day. It was a flash of
lightning into the dark vista of futurity, showing in 1816 what we
all see in 1834.
Mr. B. took up the second point on which he disagreed with the
Senator from South Carolina [Mr. Calhoun], namely, the capacity
of the Bank of the United States to supply a general currency
to the Union. In handling this question he would drop all other
inquiries--lay aside every other objection--overlook every
consideration of the constitutionality and expediency of the bank,
and confine himself to the strict question of its ability to diffuse
and retain in circulation a paper currency over this extended
Union. He would come to the question as a banker would come to it
at his table, or a merchant in his counting-room, looking to the
mere operation of a money system. It was a question for wise men to
think of, and for abler men than himself to discuss. It involved the
theory and the science of banking--Mr. B. would say the philosophy
of banking, if such a term could be applied to a moneyed system.
It was a question to be studied as the philosopher studies the
laws which govern the material world--as he would study the laws
of gravitation and attraction which govern the movements of the
planets, or draw the waters of the mountains to the level of the
ocean. The moneyed system, said Mr. B., has its laws of attraction
and gravitation--of repulsion and adhesion; and no man may be
permitted to indulge the hope of establishing a moneyed system
contrary to its own laws. The genius of man has not yet devised
a bank--the historic page is yet to be written which tells of a
bank--which has diffused over an extensive country, and retained
in circulation, a general paper currency. England is too small a
theatre for a complete example; but even there the impossibility
is confessed, and has been confessed for a century. The Bank of
England, in her greatest day of pre-eminence, could not furnish a
general currency for England alone--a territory not larger than
Virginia. The country banks furnished the local paper currency, and
still furnish it as far as it is used. They carried on their banking
upon Bank of England notes, until the gold currency was restored;
and local paper formed the mass of local circulation. The notes of
the Bank of England flowed to the great commercial capitals, and
made but brief sojourn in the counties. But England is not a fair
example for the United States; it is too small; a fairer example
is to be found nearer home, in our own country, and in this very
Bank of the United States which is now existing, and in favor of
which the function of supplying a general currency to this extended
confederacy is claimed. We have the experiment of this bank, not
once, but twice made; and each experiment proves the truth of the
laws which govern the system. The theory of bank circulation,
over an extended territory, is this, that you may put out as many
notes as you may in any one place, they will immediately fall into
the track of commerce--into the current of trade--into the course
of exchange--and follow that current wherever it leads. In these
United States the current sets from every part of the interior,
and especially from the South and West into the Northeast--into
the four commercial cities north of the Potomac; Baltimore,
Philadelphia, New-York, and Boston: and all the bank notes which
will pass for money in those places, fall into the current which
sets in that direction. When there, there is nothing in the course
of trade to bring them back. There is no reflux in that current! It
is a trade-wind which blows twelve months in the year in the same
direction. This is the theory of bank circulation over extended
territory; and the history of the present bank is an exemplification
of the truth of that theory. Listen to Mr. Cheves. Read his report
made to the stockholders at their triennial meeting in 1822. He
stated this law of circulation, and explained the inevitable
tendency of the branch bank notes to flow to the Northeast; the
impossibility of preventing it; and the resolution which he had
taken and executed, to close all the Southern and Western branches,
and prevent them from issuing any more notes. Even while issuing
their own notes, they had so far forgot their charter as to carry
on operations, in part, upon the notes of the local banks--having
collected those notes in great quantity, and loaned them out. This
was reported by the investigating committee of 1819, and made one
of the charges of misconduct against the bank at that time. To
counteract this tendency, the bank applied to Congress for leave to
issue their bank notes on terms which would have made them a mere
local currency. Congress refused it; but the bank is now attempting
to do it herself, by refusing to take the notes received in payment
of the federal revenue, and sending it back to be paid where issued.
Such was the history of the branch bank notes, and which caused
that currency to disappear from all the interior, and from the
whole South and West, so soon after the bank got into operation.
The attempt to keep out branch notes, or to send the notes of the
mother bank to any distance, being found impracticable, there was
no branch currency of any kind in circulation for a period of eight
or nine years, until the year 1827, when the branch checks were
invented, to perform the miracle which notes could not. Mr. B. would
say nothing about the legality of that invention; he would now treat
them as a legal issue under the charter; and in that most favorable
point of view for them, he would show that these branch checks were
nothing but a quack remedy--an empirical contrivance--which made
things worse. By their nature they were as strongly attracted to
the Northeast as the branch notes had been; by their terms they
were still more strongly attracted, for they bore Philadelphia on
their face! they were payable at the mother bank! and, of course,
would naturally flow to that place for use or payment. This was
their destiny, and most punctually did they fulfil it. Never did the
trade-winds blow more truly--never did the gulf stream flow more
regularly--than those checks flowed to the Northeast! The average
of four years next ensuing the invention of these checks, which
went to the mother bank, or to the Atlantic branches north of the
Potomac, including the branch notes which flowed with them, was
about nineteen millions of dollars per annum! Mr. B. then exhibited
a table to prove what he alleged, and from which it appeared that
the flow of the branch paper to the Northeast was as regular and
uniform as an operation of nature; that each city according to its
commercial importance, received a greater or less proportion of
this inland paper gulf stream; and that the annual variation was so
slight as only to prove the regularity of the laws by which it was
governed. The following is the table which he exhibited. It was one
of the tabular statements obtained by the investigating committee in
1832:
_Amount of Branch Bank Paper received at_--
1828. 1829. 1830. 1831.
1. New-York, 11,938,350 11,294,960 9,168,370 12,284,320
2. Philadelphia, 4,453,150 4,106,985 4,579,725 5,398,800
3. Boston, 1,010,730 1,844,170 1,794,750 1,816,430
4. Baltimore, 1,437,100 1,420,360 1,376,320 1,588,680
---------- ---------- ---------- ----------
18,888,330 18,666,475 16,919,160 21,092,230
After exhibiting this table, and taking it for complete proof of the
truth of the theory which he had laid down, and that it demonstrated
the impossibility of keeping up a circulation of the United States
Bank paper in the remote and interior parts of the Union, Mr. B.
went on to say that the story was yet but half told--the mischief
of this systematic flow of national currency to the Northeast, was
but half disclosed; another curtain was yet to be lifted--another
vista was yet to be opened--and the effect of the system upon the
metallic currency of the States was to be shown to the people and
the States. This view would show, that as fast as the checks or
notes of any branch were taken up at the mother bank, or at the
branches north of the Potomac, an account was opened against the
branch from which they came. The branch was charged with the amount
of the notes or checks taken up; and periodically served with a
copy of the account, and commanded to send on specie or bills of
exchange to redeem them. When redeemed, they were remitted to the
branch from which they came; while on the road they were called
notes in transitu; and when arrived they were put into circulation
again at that place--fell into the current immediately, which
carried them back to the Northeast--there taken up again, charged
to the branch--the branch required to redeem them again with specie
or bills of exchange; and then returned to her, to be again put
into circulation, and to undergo again and again, and until the
branch could no longer redeem them, the endless process of flowing
to the Northeast. The result of the whole was, is, and for ever
will be, that the branch will have to redeem its circulation till
redemption is impossible; until it has exhausted the country of
its specie; and then the country in which the branch is situated
is worse off than before she had a branch; for she had neither
notes nor specie left. Mr. B. said that this was too important a
view of the case to be rested on argument and assertion alone; it
required evidence to vanquish incredulity, and to prove it up; and
that evidence was at hand. He then referred to two tables to show
the amount of hard money which the mother bank, under the operation
of this system, had drawn from the States in which her branches
were situated. All the tables were up to the year 1831, the period
to which the last investigating committee had brought up their
inquiries. One of these statements showed the amount abstracted from
the whole Union; it was $40,040,622 20; another showed the amount
taken from the Southern and Western States; it was $22,523,387 94;
another showed the amount taken from the branch at New Orleans; it
was $12,815,798 10. Such, said Mr. B., has been the result of the
experiment to diffuse a national paper currency over this extended
Union. Twice in eighteen years it has totally failed, leaving the
country exhausted of its specie, and destitute of paper. This was
proof enough, but there was still another mode of proving the same
thing; it was the fact of the present amount of United States Bank
notes in circulation. Mr. B. had heard with pain the assertion made
in so many memorials presented to the Senate, that there was a great
scarcity of currency; that the Bank of the United States had been
obliged to contract her circulation in consequence of the removal
of the deposits, and that her notes had become so scarce that none
could be found; and strongly contrasting the present dearth which
now prevails with the abundant plenty of these notes which reigned
over a happy land before that fatal measure came to blast a state
of unparalleled prosperity. The fact was, Mr. B. said, that the
actual circulation of the bank is greater now than it was before the
removal of the deposits; greater than it has been in any month but
one for upwards of a year past. The discounts were diminished, he
said, but the circulation was increased.
Mr. B. then exhibited a table of the actual circulation of the Bank
of the United States for the whole year 1833, and for the two past
months of the present year; and stated it to be taken from the
monthly statements of the bank, as printed and laid upon the tables
of members. It was the net circulation--the quantity of notes and
checks actually out--excluding all that were on the road returning
to the branch banks, called notes in transitu, and which would
not be counted till again issued by the branch to which they were
returned.
_The following is the table_:
January, 1833, $17,666,444
February, " 18,384,050
March, " 18,033,205
April, " 18,384,075
May, " 18,991,200
June, " 19,366,555
July, " 18,890,505
August, " 18,413,287
September, " 19,128,189
October, " 18,518,000
November, " 18,650,912
December, " not found.
January, 1834, 19,208,375
February, " 19,260,472
By comparing the circulation of each month, as exhibited on this
table, Mr. B. said, it would be seen that the quantity of United
States Bank notes now in circulation is three quarters of a million
greater than it was in October last, and a million and a half
greater than it was in January, 1833. How, then, are we to account
for this cry of no money, in which so many respectable men join? It
is in the single fact of their flow to the Northeast. The pigeons,
which lately obscured the air with their numbers, have all taken
their flight to the North! But pigeons will return of themselves,
whereas these bank notes will never return till they are purchased
with gold and silver, and brought back. Mr. B. then alluded to a
petition from a meeting in his native State, North Carolina, and
in which one of his esteemed friends (Mr. Carson) late a member
of the House of Representatives, was a principal actor, and which
stated the absolute disappearance of United States Bank notes
from all that region of country. Certainly the petition was true
in that statement; but it is equally true that it was mistaken in
supposing that the circulation of the bank was diminished. The table
which he had read had shown the contrary; it showed an increase,
instead of a diminution, of the circulation. The only difference
was that it had all left that part of the country, and that it would
do for ever! If a hundred millions of United States Bank notes
were carried to the upper parts of North Carolina, and put into
circulation, it would be but a short time before the whole would
have fallen into the current which sweeps the paper of that bank to
the Northeast. Mr. B. said there were four other classes of proof
which he could bring in, but it would be a consumption of time,
and a work of supererogation. He would not detail them, but state
their heads: 1. One was the innumerable orders which the mother
bank had forwarded to her branches to send on specie and bills of
exchange to redeem their circulation--to pour in reinforcements
to the points to which their circulation tends; 2. Another was
in the examination of Mr. Biddle, president of the bank, by the
investigating committee, in 1832, in which this absorbing tendency
of the branch paper to flow to the Northeast was fully charged and
admitted; 3. A third was in the monthly statement of the notes _in
transitu_, which amount to an average of four millions and a half
for the last twelve months, making fifty millions for the year; and
which consist, by far the greater part, of branch notes and checks
redeemed in the Northeast, purchased back by the branches, and on
their way back to the place from which they issued; and, 4. The
last class of proof was in the fact, that the branches north of the
Potomac, being unable or unwilling to redeem these notes any longer,
actually ceased to redeem them last fall, even when taken in revenue
payment to the United States, until coerced by the Secretary of
the Treasury; and that they will not be redeemed for individuals
now, and are actually degenerating into a mere local currency. Upon
these proofs and arguments, Mr. B. rested his case, and held it
to be fully established first, by argument, founded in the nature
of bank circulation over an extended territory; and secondly, by
proof, derived from the operation of the present bank of the United
States, that neither the present bank, nor any one that the wisdom
of man can devise, can ever succeed in diffusing a general paper
circulation over the States of this Union.
VI. Dropping every other objection to the bank--looking at it purely
and simply as a supplier of national currency--he, Mr. B., could
not consent to prolong the existence of the present bank. Certainly
a profuse issue of paper at all points--an additional circulation
of even a few millions poured out at the destitute points--would
make currency plenty for a little while, but for a little while
only. Nothing permanent would result from such a measure. On the
contrary, in one or two years, the destitution and distress would be
greater than it now is. At the same time, it is completely in the
power of the bank, at this moment, to grant relief, full, adequate,
instantaneous relief! In making this assertion, Mr B. meant to prove
it; and to prove it, he meant to do it in a way that it should reach
the understanding of every candid and impartial friend that the bank
possessed; for he meant to discard and drop from the inquiry, all
his own views upon the subject; to leave out of view every statement
made, and every opinion entertained by himself, and his friends, and
proceed to the inquiry upon the evidence of the bank alone--upon
that evidence which flowed from the bank directory itself, and from
the most zealous, and best informed of its friends on this floor.
Mr. B. assumed that a mere cessation to curtail discounts, at this
time, would be a relief--that it would be the salvation of those
who were pressed--and put an end to the cry of distress; he averred
that this curtailment must now cease, or the bank must find a new
reason for carrying it on; for the old reason is exhausted, and
cannot apply. Mr. B. then took two distinct views to sustain his
position: one founded in the actual conduct and present condition of
the bank itself, and the other in a comparative view of the conduct
and condition of the former Bank of the United States, at the
approaching period of its dissolution.
I. As to the conduct and condition of the present bank.
Mr. B. appealed to the knowledge of all present for the accuracy
of his assertion, when he said that the bank had now reduced her
discounts, dollar for dollar, to the amount of public deposits
withdrawn. The adversaries of the bank said the reduction was much
larger than the abstraction; but he dropped that, and confined
himself strictly to the admissions and declarations of the bank
itself. Taking then the fact to be, as the bank alleged it to
be, that she had merely brought down her business in proportion
to the capital taken from her, it followed of course that there
was no reason for reducing her business any lower. Her relative
position--her actual strength--was the same now that it was before
the removal; and the old reason could not be available for the
reduction of another dollar. Next, as to her condition. Mr. B.
undertook to affirm, and would quickly prove, that the general
condition of the bank was better now than it had been for years
past; and that the bank was better able to make loans, or to
increase her circulation, than she was in any of those past periods
in which she was so lavishly accommodating the public. For the
proof of this, Mr. B. had recourse to her specie fund, always the
true test of a bank's ability, and showed it to be greater now than
it had been for two years past, when her loans and circulation
were so much greater than they are now. He took the month of May,
1832, when the whole amount of specie on hand was $7,890,347 59;
when the net amount of notes in circulation was $21,044,415; and
when the total discounts were $70,428,070 72: and then contrasted
it with the condition of the bank at this time, that is to say,
in the month of February last, when the last return was made; the
items stands thus: specie, $10,523,385 69; net amount of notes in
circulation, $19,260,472; total discounts, $54,842,973 64. From this
view of figures, taken from the official bank returns, from which
it appeared that the specie in the bank was nearly three millions
greater than it was in May, 1832, her net circulation nearly two
millions less, and her loans and discounts upwards of fifteen
millions less; Mr. B. would submit it to all candid men to say
whether the bank is not more able to accommodate the community now
than she was then? At all events, he would demand if she was not now
able to cease pressing them?
II. As to the comparative condition and conduct of the first Bank
the United States at the period of its approaching dissolution.
Mr. B. took the condition of the bank from Mr. Gallatin's statement
of its affairs to Congress, made in January, 1811, just three months
before the charter expired; and which showed the discounts and loans
of the bank to be $14,578,294 25, her capital being $10,000,000; so
that the amount of her loans, three months before her dissolution,
was nearly in proportion--near enough for all practical views--to
the proportion which the present loans of the Bank of the United
States bear to its capital of thirty-five millions. Fifty per cent.
upon the former would give fifteen millions; fifty per cent. upon
the latter would give fifty-two millions and a half. To make the
relative condition of the two banks precisely equal, it will be
sufficient that the loans and discounts of the present bank shall be
reduced to fifty-two millions by the month of January, 1836; that
is to say, it need not make any further sensible reduction of its
loans for nearly two years to come. Thus, the mere imitation of the
conduct of the old bank will be a relief to the community. A mere
cessation to curtail, will put an end to the distress, and let the
country go on, quietly and regularly, in its moneyed operations.
If the bank will not do this--if it will go on to curtail--it is
bound to give some new reason to the country. The old reason, of
the removal of the deposits, will no longer answer. Mr. B. had no
faith in that reason from the beginning, but he was now taking the
bank upon her own evidence, and trying her upon her own reasons,
and he held it to be impossible for her to go on without the
production of a reason. The hostility of the government--rather
an incomprehensible, and altogether a gratuitous reason, from the
beginning--will no longer answer. The government in 1811 was as
hostile to the old bank, as the government now is to this one;
and rather more so. Both Houses of Congress were then hostile to
it, and hostile unto death! For they let it die! die on the day
appointed by law for its death, without pity, without remorse,
without the reprieve of one day. The government can do no worse now.
The Secretary of the Treasury has removed the deposits; and that
account is settled by the reduction of an equal amount of loans and
discounts. The rest depends upon the government; and the hostility
of the government cannot go further than to kill the bank, and
cannot kill it more dead than the old bank was killed in 1811. Mr.
B. had a further comparison to draw between the conduct of the old
bank, and the present one. The old bank permitted her discounts
to remain at their maximum to the very end of her charter; she
discounted sixty days' paper up to the last day of her existence;
while this bank has commenced a furious curtailment two years and
a half before the expiration of her charter. Again: the old bank
had not an hour, as a corporation, to wind up her business after
the end of her charter; this bank has the use of all her corporate
faculties, for that purpose, for two years after the end of her
charter. Again: the present bank pretends that she will have to
collect the whole of her debts within the period limited for winding
up her affairs; the old bank took upwards of twelve years after the
expiration of her charter to collect hers! She created a trust; she
appointed trustees; all the debts and credits were put into their
hands, the trustees proceeded like any other collectors, giving time
to all debtors who would secure the debt, pay interest punctually,
and discharge the principal by instalments. This is what the old
bank did; and she did not close her affairs until the 16th of June,
in the year 1823. The whole operation was conducted so gently,
that the public knew nothing about it. The cotemporaries of the
dissolution of the bank, knew nothing about its dissolution. And
this is what the present bank may do, if it pleases. That it has not
done so--that it is now grinding the community, and threatening to
grind them still harder, is a proof of this dangerous nature of a
great moneyed power; and should be a warning to the people who now
behold its conduct--who feel its gripe, and hear its threat--never
to suffer the existence of such another power in our free and happy
land.
VII. Mr. B. deprecated the spirit which seemed to have broken out
against State banks; it was a spirit which augured badly for the
rights of the States. Those banks were created by the States;
and the works of the States ought to be respected; the stock in
those banks was held by American citizens, and ought not to be
injuriously assailed to give value to stock held in the federal
bank by foreigners and aliens. The very mode of carrying on the
warfare against State banks, has itself been an injury, and a just
cause of complaint. Some of the most inconsiderable have been picked
out--their affairs presented in the most unfavorable light; and then
held forth as a fair sample of the whole. How much more easy would
it have been to have acted a more grateful, and a more equitable
part! a part more just to the State governments which created those
banks, and the American citizens who held stock in them! Instead
of hunting out for remote and inconsiderable banks, and instituting
a most disparaging scrutiny into their small affairs, and making
this high Senate the conspicuous theatre for the exhibition of
their insignificance, why not take the higher order of the State
banks?--those whose names and characters are well known? whose stock
upon the exchange of London and New-York, is superior to that of the
United States Bank? whose individual deposits are greater than those
of the rival branches of the Bank of the United States, seated in
their neighborhood? whose bills of exchange are as eagerly sought
for as those of the federal bank? which have reduced exchange below
the rates of the federal bank? and which, in every particular that
tries the credit, is superior to the one which is receiving so much
homage and admiration? Mr. B. said there were plenty of such State
banks as he had described; they were to be found in every principal
city, from New Orleans to Boston. Some of them had been selected for
deposit banks, others not; but there was no difficulty in making a
selection of an ample number.
This spirit of hostility to the State banks, Mr. B. said, was of
recent origin, and seemed to keep pace with the spirit of attack
upon the political rights of the States. When the first federal bank
was created, in the year 1791, it was not even made, by its charter,
a place of deposit for the public moneys. Mr. Jefferson preferred
the State banks at that time; and so declared himself in his cabinet
opinion to President Washington. Mr. Gallatin deposited a part of
the public moneys in the State banks during the whole of the long
period that he was at the head of the treasury. At the dissolution
of the first Bank of the United States, he turned over all the
public moneys which he held in deposit to these banks, taking their
obligation to pay out all the treasury warrants drawn upon them in
gold and silver, if desired by the holder. When the present bank
was chartered, the State banks stood upon an equal footing with the
federal bank, and were placed upon an equality with it as banks of
deposit, in the very charter which created the federal bank. Mr. B.
was alluding to the 14th fundamental article of the constitution
of the bank--the article which provided for the establishment of
branches--and which presented an argument in justification of the
removal of the deposits which the adversaries of that measure most
pertinaciously decline to answer. The government wanted banks of
deposit, not of circulation; and by that article, the State banks
are made just as much banks of deposit for the United States as the
Bank of the United States is. They are put upon exact equality,
so far as the federal government is concerned; for she stipulates
but for one single branch of the United States Bank, and that to
be placed at Washington city. As for all other branches, their
establishment was made to depend--not on the will, or power, of
the federal government--not on any supposed or real necessity on
her part to have the use of such branches--but upon contingencies
over which she had no control; contingencies depending, one upon
the mere calculation of profit and loss by the bank itself, the
other upon the subscriptions of stock within a State, and the
application of its legislature. In these contingencies, namely,
if the Bank of the United States thought it to her interest to
establish branches in the States, she might do it; or, if 2,000
shares of stock was subscribed for in a State, and thereupon an
application was made by the State legislature for the institution of
a branch, then its establishment within the State became obligatory
upon the bank. In neither contingency had the will, the power,
or the necessities of the federal government, the least weight,
concern, or consideration, in the establishment of the branch. If
not established, and so far as the government is concerned, it might
not be, then the State banks, selected by the United States Bank,
and approved by the Secretary of the Treasury, were to be the banks
of deposit for the federal moneys. This was an argument, Mr. B.
said, in justification of the removal of the deposits, and in favor
of the use of the State banks which gentlemen on the opposite side
of the question--gentlemen who take so much pains to decry State
banks--have been careful not to answer.
The evils of a small paper circulation, he considered among the
greatest grievances that could afflict a community. The evils
were innumerable, and fell almost exclusively upon those who were
least able to bear them, or to guard against them. If a bank stops
payment, the holders of the small notes, who are usually the working
part of the community, are the last to find it out, and the first
to suffer. If counterfeiting is perpetrated, it is chiefly the
small notes which are selected for imitation, because they are most
current among those who know the least about notes, and who are most
easily made the dupes of imposition, and the victims of fraud. As
the expeller of hard money, small notes were the bane and curse of a
country. A nation is scarce, or abundant, in hard money, precisely
in the degree in which it tolerates the lower denominations of bank
notes. France tolerates no note less than $100; and has a gold and
silver circulation of 350 millions of dollars. England tolerates no
note of less than $25; and has a gold and silver circulation of 130
millions of dollars: in the United States, where $5 is the minimum
size of the federal bank notes, the whole specie circulation,
including what is in the banks, does not amount to thirty millions
of dollars. To increase the quantity of hard money in the United
States, and to supply the body of the people with an adequate specie
currency to serve for their daily wants, and ordinary transactions,
the banknote circulation below twenty dollars, ought to be
suppressed. If Congress could pass a law to that effect, it ought
to bed one; but it cannot pass such a law: it has no constitutional
power to pass it. Congress can, however, do something else, which
will, in time, effectually put down such a currency. It can discard
it, and disparage it. It can reject it from all federal payments. It
can reject the whole circulation of any bank that will continue to
issue small notes. Their rejection from all federal payments, would
check their currency, and confine the orbit of their circulation
to the immediate neighborhood of the issuing bank. The bank itself
would find but little profit from issuing them--public sentiment
would come to the aid of federal policy. The people of the States,
when countenanced and sustained by the federal government, would
indulge their natural antipathy and honest detestation of a small
paper currency. They would make war upon all small notes. The
State legislatures would be under the control of the people; and
the States that should first have the wisdom to limit their paper
circulation to a minimum of twenty dollar bills, would immediately
fill up with gold and silver. The common currency would be
entirely metallic; and there would be a broad and solid basis for
a superstructure of large notes; while the States which continued
to tolerate the small notes, would be afflicted with all the evils
of a most pestilential part of the paper system,--small notes, part
counterfeit, part uncurrent, half worn out; and all incapable of
being used with any regard to a beneficial economy. Mr. B. went on
to depict the evils of a small note currency, which he looked upon
as the bane and curse of the laboring part of the community, and the
reproach and opprobrium of any government that tolerated it. He said
that the government which suffered its currency to fall into such a
state that the farmer, the artisan, the market man, the day laborer,
and the hired servant, could only be paid in small bank notes, was a
government which abdicated one of its most sacred duties; and became
an accomplice on the part of the strong in the oppression of the
weak.
Mr. B. placed great reliance upon the restoration of the gold
currency for putting down a small note circulation. No man would
choose to carry a bundle of small bank notes in his pocket, even
new and clean ones, much less old, ragged, and filthy ones, when he
could get gold in their place. A limitation upon the receivability
of these notes, in payment of federal dues, would complete their
suppression. Mr. B. did not aspire to the felicity of seeing as
fine a currency in the United States as there is in France, where
there was no bank note under five hundred francs, and where there
was a gold and silver circulation at the rate of eleven dollars a
head for each man, woman, and child, in the kingdom, namely, three
hundred and fifty millions of dollars for a population of thirty-two
millions of souls; but he did aspire to the comparative happiness
of seeing as good currency established for ourselves, by ourselves,
as our old fellow-subjects--the people of old England--now possess
from their king, lords, and commons. They--he spoke of England
proper--had no bank note less than five pounds sterling, and they
possessed a specie circulation (of which three-fourths was gold) at
the rate of about nine dollars a head, men, women, children (even
paupers) included; namely, about one hundred and thirty millions for
a population of fourteen millions. He, Mr. B., must be allowed to
aspire to the happiness of possessing, and in his sphere to labor
to acquire, as good a circulation as these English have; and that
would be an immeasurable improvement upon our present condition.
We have local bank notes of one, two, three, four dollars; we have
federal bank notes of five and ten dollars--the notes of those
English who are using gold at home while we are using their paper
here:--we have not a particle of gold, and not more silver than at
the rate of about two dollars a head, men, women, children (even
slaves) included; namely, about thirty millions of silver for a
population of thirteen millions. Mr. B. believed there was not upon
the face of the earth, a country whose actual currency was in a more
deplorable condition than that of the United States was at present;
the bitter fruit of that fatal paper system which was brought upon
us, with the establishment of the first Bank of the United States in
1791, and which will be continued upon us until the citadel of that
system--the Bastile of paper money, the present Bank of the United
States,--shall cease to exist.
Mr. B. said, that he was not the organ of the President on this
floor--he had no authority from the President to speak his
sentiments to the Senate. Even if he knew them, it would be
unparliamentary, and irregular, to state them. There was a way for
the Senate to communicate with the President, which was too well
known to every gentleman to require any indication from him. But
he might be permitted to suggest--in the absence of all regular
information--that if any Senator wished to understand, and to
comment upon, the President's opinions on currency, he might,
perhaps, come something nearer to the mark, by commenting on what
he (Mr. B.) had been saying, than by having recourse to the town
meeting reports of inimical bank committees.