public debt being a public blessing’; that the stock representing it was
a creation of active capital for the aliment of commerce, manufactures,
and agriculture. This paradox was well adapted to the minds of believers
in dreams, and the gulls of that size entered _bonâ fide_ into it. But
the art and mystery of banks is a wonderful improvement on that. It
is established on the principle, that ‘private debts are a public
blessing;’ that the evidences of those private debts, called bank-notes,
become active capital, and aliment the whole commerce, manufactures,
and agriculture of the United States. Here are a set of people, for
instance, who have bestowed on us the great blessing of running in our
debt about two hundred millions of dollars, without our knowing who they
are, where they are, or what property they have to pay this debt when
called on; nay, who have made us so sensible of the blessings of
letting them run in our debt, that we have exempted them by law from the
repayment of these debts beyond a given proportion, (generally estimated
at one third.) And to fill up the measure of blessing, instead of
paying, they receive an interest on what they owe from those to whom
they owe; for all the notes, or evidences of what they owe, which we
see in circulation, have been lent to somebody on an interest which is
levied again on us through the medium of commerce. And they are so ready
still to deal out their liberalities to us, that they are now willing to
let themselves run in our debt ninety millions more, on our paying them
the same premium of six or eight per cent, interest, and on the same
legal exemption from the repayment of more than thirty millions of the
debt, when it shall be called for. But let us look at this principle
in its original form, and its copy will then be equally understood.
‘A public debt is a public blessing.’ That our debt was juggled from
forty-three up to eighty millions, and funded at that amount, according
to this opinion, was a great public blessing, because the evidences of
it could be vested in commerce, and thus converted into active capital,
and then the more the debt was made to be, the more active capital was
created. That is to say, the creditors could now employ in commerce the
money due them from the public, and make from it an annual profit of
five per cent., or four millions of dollars. But observe, that the
public were at the same time paying on it an interest of exactly the
same amount of four millions of dollars. Where then is the gain to
either party, which makes it a public blessing? There is no change in
the state of things, but of persons only. A has a debt due to him from
the public, of which he holds their certificate as evidence, and on
which he is receiving an annual interest. He wishes, however, to have
the money itself, and to go into business with it. B has an equal sum of
money in business, but wishes now to retire, and live on the interest.
He therefore gives it to A, in exchange for A’s certificates of public
stock. Now, then, A has the money to employ in business, which B so
employed before. B has the money on interest to live on, which A lived
on before: and the public pays the interest to B, which they paid to
A before. Here is no new creation of capital, no additional money
employed, nor even a change in the employment of a single dollar.
The only change is of place between A and B, in which we discover no
creation of capital, nor public blessing. Suppose, again, the public to
owe nothing. Then A not having lent his money to the public, would be
in possession of it himself, and would go into business without the
previous operation of selling stock. Here again, the same quantity of
capital is employed as in the former case, though no public debt exists.
In neither case is there any creation of active capital, nor other
difference than that there is a public debt in the first case, and none
in the last; and we may safely ask which of the two situations is most
truly a public blessing? If, then, a public debt be no public blessing,
we may pronounce _a fortiori_, that a private one cannot be so. If the
debt which the banking companies owe be a blessing to any body, it is to
themselves alone, who are realizing a solid interest of eight or ten
per cent, on it. As to the public, these companies have banished all our
gold and silver medium, which, before their institution, we had without
interest, which never could have perished in our hands, and would have
been our salvation now in the hour of war; instead of which, they have
given us two hundred millions of froth and bubble, on which we are to
pay them heavy interest, until it shall vanish into air, as Morris’s
notes did. We are warranted, then, in affirming that this parody on the
principle of ‘a public debt being a public blessing,’ and its mutation
into the blessing of private instead of public debts, is as ridiculous
as the original principle itself. In both cases, the truth is, that
capital may be produced by industry, and accumulated by economy: but
jugglers only will propose to create it by legerdemain tricks with
paper. I have called the actual circulation of bank paper in the United
States, two hundred millions of dollars. I do not recollect where I have
seen this estimate; but I retain the impression that I thought it just
at the time. It may be tested, however, by a list of the banks now in
the United States, and the amount of their capital. I have no means of
recurring to such a list for the present day: but I turn to two lists in
my possession for the years of 1803 and 1804.
In 1803, there were thirty-four banks, whose capital was $28,902,000
In 1804, there were sixty-six, consequently thirty-two additional ones.
Their capital is not stated, but at the average of the others (excluding
the highest, that of the United States, which was of ten millions)
they would be of six hundred thousand dollars each, and
add.........19,200,000
Making a total of........ $48,102,000
or say, of fifty millions in round numbers. Now every one knows the
immense multiplication of these institutions since 1804. If they have
only doubled, their capital will be of one hundred millions, and if
trebled, as I think probable, it will be of one hundred and fifty
millions, on which they are at liberty to circulate treble the amount.
I should sooner, therefore, believe two hundred millions to be far below
than above the actual circulation. In England, by a late parliamentary
document, (see Virginia Argus of October the 18th, 1813, and other
public papers of about that date) it appears that six years ago, the
bank of England had twelve millions of pounds sterling in circulation,
which had increased to forty-two millions in 1812, or to one hundred and
eighty-nine millions of dollars. What proportion all the other banks may
add to this, I do not know: if we were allowed to suppose they equal
it, this would give a circulation of three hundred and seventy-eight
millions, or the double of ours on a double population. But that nation
is essentially commercial, ours essentially agricultural, and needing,
therefore, less circulating medium, because the produce of the
husbandman comes but once a year, and is then partly consumed at home,
partly exchanged by barter. The dollar, which was of four shillings and
six pence sterling, was, by the same document, stated to be then six
shillings and nine pence, a depreciation of exactly fifty per cent. The
average price of wheat on the continent of Europe, at the commencement
of its present war with England, was about a French crown, of one
hundred and ten cents, the bushel. With us it was one hundred cents, and
consequently we could send it there in competition with their own.
That ordinary price has now doubled with us, and more than doubled in
England; and although a part of this augmentation may proceed from the
war demand, yet from the extraordinary nominal rise in the prices of
land and labor here, both of which have nearly doubled in that period,
and are still rising with every new bank, it is evident that were
a general peace to take place to-morrow, and time allowed for the
re-establishment of commerce, justice, and order, we could not afford
to raise wheat for much less than two dollars, while the continent of
Europe, having no paper circulation, and that of its specie not being
augmented, would raise it at their former price of one hundred and ten
cents. It follows, then, that with our redundancy of paper, we cannot,
after peace, send a bushel of wheat to Europe, unless extraordinary
circumstances double its price in particular places, and that then the
exporting countries of Europe could undersell us. It is said our paper
is as good as silver, because we may have silver for it at the bank
where it issues. This is not true. One, two, or three persons might have
it: but a general application would soon exhaust their vaults, and leave
a ruinous proportion of their paper in its intrinsic worthless form.
It is a fallacious pretence, for another reason. The inhabitants of the
banking cities might obtain cash for their paper, as far as the cash of
the vaults would hold out; but distance puts it out of the power of the
country to do this. A farmer having a note of a Boston or Charleston
bank, distant hundreds of miles, has no means of calling for the cash.
And while these calls are impracticable for the country, the banks have
no fear of their being made from the towns; because their inhabitants
are mostly on their books, and there on sufferance only and during good
behavior.
In this state of things, we are called on to add ninety millions more
to the circulation. Proceeding in this career, it is infallible, that we
must end where the revolutionary paper ended. Two hundred millions was
the whole amount of all the emissions of the old Congress, at which
point their bills ceased to circulate. We are now at that sum; but with
treble the population, and of course a longer tether. Our depreciation
is, as yet, but at about two for one. Owing to the support its credit
receives from the small reservoirs of specie in the vaults of the banks,
it is impossible to say at what point their notes will stop. Nothing
is necessary to effect it but a general alarm; and that may take
place whenever the public shall begin to reflect on, and perceive, the
impossibility that the banks should repay this sum. At present, caution
is inspired no farther than to keep prudent men from selling property
on long payments. Let us suppose the panic to arise at three hundred
millions, a point to which every session of the legislatures hastens
us by long strides. Nobody dreams that they would have three hundred
millions of specie to satisfy the holders of their notes. Were they even
to stop now, no one supposes they have two hundred millions in cash, or
even the sixty-six and two-thirds millions, to which amount alone the
law obliges them to repay. One hundred and thirty-three and one-third
millions of loss, then, is thrown on the public by law; and as to the
sixty-six and two-thirds, which they are legally bound to pay, and ought
to have in their vaults, every one knows there is no such amount of cash
in the United States, and what would be the course with what they really
have there? Their notes are refused. Cash is called for. The inhabitants
of the banking towns will get what is in the vaults, until a few banks
declare their insolvency; when, the general crush becoming evident, the
others will withdraw even the cash they have, declare their bankruptcy
at once, and leave an empty house and empty coffers for the holders of
their notes. In this scramble of creditors, the country gets nothing,
the towns but little. What are they to do? Bring suits? A million of
creditors bring a million of suits against John Nokes and Robert Styles,
wheresoever to be found? All nonsense. The loss is total. And a sum is
thus swindled from our citizens, of seven times the amount of the real
debt, and four times that of the factitious one of the United States,
at the close of the war. All this they will justly charge on their
legislatures; but this will be poor satisfaction for the two or three
hundred millions they will have lost. It is time, then, for the public
functionaries to look to this. Perhaps it may not be too late. Perhaps,
by giving time to the banks, they may call in and pay off their paper
by degrees. But no remedy is ever to be expected while it rests with
the State legislatures. Personal motives can be excited through so many
avenues to their will, that, in their hands, it will continue to go on
from bad to worse, until the catastrophe overwhelms us. I still
believe, however, that on proper representations of the subject, a great
proportion of these legislatures would cede to Congress their power of
establishing banks, saving the charter rights already granted. And this
should be asked, not by way of amendment to the constitution, because
until three fourths should consent, nothing could be done; but accepted
from them one by one, singly, as their consent might be obtained. Any
single State, even if no other should come into the measure, would find
its interest in arresting foreign bank-paper immediately, and its own
by degrees. Specie would flow in on them as paper disappeared. Their
own banks would call in and pay off their notes gradually, and their
constituents would thus be saved from the general wreck. Should the
greater part of the States concede, as is expected, their power over
banks to Congress, besides insuring their own safety, the paper of
the non-conceding States might be so checked and circumscribed, by
prohibiting its receipt in any of the conceding States, and even in the
non-conceding as to duties, taxes, judgments, or other demands of the
United States, or of the citizens of other States, that it would
soon die of itself, and the medium of gold and silver be universally
restored. This is what ought to be done. But it will not be done.
_Carthago non delebitur_. The overbearing clamor of merchants,
speculators, and projectors, will drive us before them with our eyes
open, until, as in France, under the Mississippi bubble, our citizens
will be overtaken by the crash of this baseless fabric, without
other satisfaction than that of execrations on the heads of those
functionaries, who, from ignorance, pusillanimity, or corruption, have
betrayed the fruits of their industry into the hands of projectors and
swindlers.
When I speak comparatively of the paper emissions of the old Congress
and the present banks, let it not be imagined that I cover them under
the same mantle. The object of the former was a holy one; for if ever
there was a holy war, it was that which saved our liberties and gave us
independence. The object of the latter, is to enrich swindlers at the
expense of the honest and industrious part of the nation.
The sum of what has been said is, that pretermitting the constitutional
question on the authority of Congress, and considering this application
on the grounds of reason alone, it would be best that our medium should
be so proportioned to our produce, as to be on a par with that of the
countries with which we trade, and whose medium is in a sound state:
that specie is the most perfect medium, because it will preserve its own
level; because, having intrinsic and universal value, it can never die
in our hands, and it is the surest resource of reliance in time of
war: that the trifling economy of paper, as a cheaper medium, or its
convenience for transmission, weighs nothing in opposition to the
advantages of the precious metals: that it is liable to be abused, has
been, is, and for ever will be abused, in every country in which it is
permitted; that it is already at a term of abuse in these States, which
has never been reached by any other nation, France excepted, whose
dreadful catastrophe should be a warning against the instrument which
produced it: that we are already at ten or twenty times the due quantity
of medium; insomuch, that no man knows what his property is now worth,
because it is bloating while he is calculating; and still less what
it will be worth when the medium shall be relieved from its present
dropsical state: and that it is a palpable falsehood to say we can have
specie for our paper whenever demanded. Instead, then, of yielding to
the cries of scarcity of medium set up by speculators, projectors, and
commercial gamblers, no endeavors should be spared to begin the work of
reducing it by such gradual means as may give time to private fortunes
to preserve their poise, and settle down with the subsiding medium; and
that, for this purpose, the States should be urged to concede to the
General Government, with a saving of chartered rights, the exclusive
power of establishing banks of discount for paper.
To the existence of banks of discount for cash, as on the continent of
Europe, there can be no objection, because there can be no danger of
abuse, and they are a convenience both to merchants and individuals.
I think they should even be encouraged, by allowing them a larger than
legal, interest on short discounts, and tapering thence, in proportion
as the term of discount is lengthened, down to legal interest on those
of a year or more. Even banks of deposite, where cash should be lodged,
and a paper acknowledgment taken out as its representative, entitled
to a return of the cash on demand, would be convenient for remittances,
travelling persons, he. But, liable as its cash would be to be pilfered
and robbed, and its paper to be fraudulently re-issued, or issued
without deposite, it would require skilful and strict regulation. This
would differ from the bank of Amsterdam, in the circumstance that the
cash could be re-demanded on returning the note.
When I commenced this letter to you, my dear Sir, on Mr. Law’s memorial,
I expected a short one would have answered that. But as I advanced, the
subject branched itself before me into so many collateral questions,
that even the rapid views I have taken of each have swelled the volume
of my letter beyond my expectations, and, I fear, beyond your patience.
Yet on a revisal of it, I find no part which has not so much bearing on
the subject as to be worth merely the time of perusal. I leave it
then as it is; and will add only the assurances of my constant and
affectionate esteem and respect.
Th: Jefferson.
LETTER CXIV.--TO JOHN ADAMS, October 13, 1813
TO JOHN ADAMS.
Monticello, October 13, 1813.
Dear Sir,
Since mine of August the 22nd, I have received your favors of August the
16th, September the 2nd, 14th, 15th, and, and Mrs. Adams’s, of September
the 20th. I now send you, according to your request, a copy of the
syllabus. To fill up this skeleton with arteries, with veins, with
nerves, muscles, and flesh, is really beyond my time and information.
Whoever could undertake it, would find great aid in Enfield’s judicious
abridgment of Brucker’s History of Philosophy, in which he has reduced
five or six quarto volumes, of one thousand pages each of Latin closely
printed, to two moderate octavos of English open type.
To compare the morals of the Old, with those of the New Testament, would
require an attentive study of the former, a search through all its books
for its precepts, and through all its history for its practices, and the
principles they prove. As commentaries, too, on these, the philosophy of
the Hebrews must be inquired into, their Mishna, their Gemara,
Cabbala, Jezirah, Sonar, Cosri, and their Talmud, must be examined and
understood, in order to do them full justice. Brucker, it would seem,
has gone deeply into these repositories of their ethics, and Enfield his
epitomizer, concludes in these words. ‘Ethics were so little understood
among the Jews, that, in their whole compilation called the Talmud,
there is only one treatise on moral subjects. Their books of morals
chiefly consisted in a minute enumeration of duties. From the law of
Moses were deduced six hundred and thirteen precepts, which were divided
into two classes, affirmative and negative, two hundred and forty-eight
in the former, and three hundred and sixty-five in the latter. It may
serve to give the reader some idea of the low state of moral philosophy
among the Jews in the middle age, to add, that of the two hundred
and forty-eight affirmative precepts, only three were considered as
obligatory upon women; and that, in order to obtain salvation, it was
judged sufficient to fulfil any one single law in the hour of death;
the observance of the rest being deemed necessary, only to increase the
felicity of the future life. What a wretched depravity of sentiment
and manners must have prevailed, before such corrupt maxims could have
obtained credit! It is impossible to collect from these writings a
consistent series of moral doctrine. (Enfield, B. 4. chap. 3.) It
was the reformation of this wretched depravity of morals which Jesus
undertook. In extracting the pure principles which he taught, we should
have to strip off the artificial vestments in which they have been
muffled by priests who have travestied them into various forms, as
instruments of riches and power to themselves. We must dismiss the
Platonists and Plotinists, the Stagyrites and Gamalielites, the
Eclectics, the Gnostics and Scholastics, their essences and emanations,
their Logos and Demiurgos, Æons, and Daemons, male and female, with a
long train of &c. &c. &c. or, shall I say at once, of nonsense. We must
reduce our volume to the simple evangelists, select, even from them, the
very words only of Jesus, paring off the amphiboligisms into which
they have been led, by forgetting often, or not understanding, what had
fallen from him, by giving their own misconceptions as his dicta,
and expressing unintelligibly for others what they had not understood
themselves. There will be found remaining the most sublime and
benevolent code of morals which has ever been offered to man. I have
performed this operation for my own use, by cutting verse by verse out
of the printed book, and arranging the matter which is evidently his,
and which is as easily distinguishable as diamonds, in a dunghill. The
result is an octavo of forty-six pages, of pure and unsophisticated
doctrines, such as were professed and acted on by the unlettered
Apostles, the Apostolic Fathers, and the Christians, of the first
century. Their Platonizing successors, indeed, in after times, in order
to legitimate the corruptions which they had incorporated into the
doctrines of Jesus, found it necessary to disavow the primitive
Christians, who had taken their principles from the mouth of Jesus
himself, of his Apostles, and the Fathers cotemporary with them. They
excommunicated their followers as heretics, branding them with the
opprobrious name of Ebionites and Beggars. For a comparison of the
Grecian philosophy with that of Jesus, materials might be largely drawn
from the same source. Enfield gives a history and detailed account of
the opinions and principles of the different sects. These relate to
the Gods, their natures, grades, places, and powers; the demi-Gods and
Demons, and their agency with man; the universe, its structure, extent,
and duration; the origin of things from the elements of fire, water,
air, and earth; the human soul, its essence and derivation; the _summum
bonum_, and _finis bonorum_; with a thousand idle dreams and fancies on
these and other subjects, the knowledge of which is withheld from man;
leaving but a short chapter for his moral duties, and the principal
section of that given to what he owes himself, to precepts for
rendering him impassible, and unassailable by the evils of life, and for
preserving his mind in a state of constant serenity.
Such a canvass is too broad for the age of seventy, and especially of
one whose chief occupations have been in the practical business of life.
We must leave, therefore, to others, younger and more learned than
we are, to prepare this euthanasia for Platonic Christianity, and its
restoration to the primitive simplicity of its founder. I think you give
a just outline of the theism of the three religions, when you say that
the principle of the Hebrew was the fear, of the Gentile the honor, and
of the Christian the love of God.
An expression in your letter of September the 14th, that ‘the human
understanding is a revelation from its maker,’ gives the best solution
that I believe can be given of the question, ‘What did Socrates mean by
his Daemon?’ He was too wise to believe, and too honest to pretend, that
he had real and familiar converse with a superior and invisible being.
He probably considered the suggestions of his conscience, or reason,
as revelations, or inspirations from the Supreme mind, bestowed, on
important occasions, by a special superintending providence.
I acknowledge all the merit of the hymn of Cleanthes to Jupiter, which
you ascribe to it. It is as highly sublime as a chaste and correct
imagination can permit itself to go. Yet in the contemplation of a being
so superlative, the hyperbolic flights of the Psalmist may often be
followed with approbation, even with rapture; and I have no hesitation
in giving him the palm over all the hymnists of every language, and of
every time. Turn to the 148th psalm in Brady and Tate’s version. Have
such conceptions been ever before expressed? Their version of the 15th
psalm is more to be esteemed for its pithiness than its poetry. Even
Sternhold, the leaden Sternhold, kindles, in a single instance, with the
sublimity of his original, and expresses the majesty of God descending
on the earth, in terms not unworthy of the subject.
[Illustration: page225]
The Latin versions of this passage by Buchanan and by Johnston, are but
mediocres. But the Greek of Duport is worthy of quotation.
The best collection of these psalms is that of the Octagonian dissenters
of Liverpool, in their printed form of prayer; but they are not always
the best versions. Indeed, bad is the best of the English versions; not
a ray of poetical genius having ever been employed on them. And how much
depends on this, may be seen by comparing Brady and Tate’s 15th psalm
with Blacklock’s _Justum et tenacem propositi virum_ of Horace, quoted
in Hume’s History, Car. 2. ch. 66. A translation of David in this style,
or in that of Pompei’s Cleanthes, might give us some idea of the merit
of the original. The character, too, of the poetry of these hymns is
singular to us; written in monostichs, each divided into strophe
and antistrophe, the sentiment of the first member responded with
amplification or antithesis in the second.
On the subject of the Postscript of yours of August the 16th and of Mrs.
Adams’s letter, I am silent. I know the depth of the affliction it has
caused, and can sympathize with it the more sensibly, inasmuch as there
is no degree of affliction, produced by the loss of those dear to us,
which experience has not taught me to estimate. I have ever found time
and silence the only medicine, and these but assuage, they never can
suppress, the deep-drawn sigh which recollection for ever brings
up, until recollection and life are extinguished together. Ever
affectionately yours.
Th: Jefferson.
LETTER CXV.--TO JOHN ADAMS, October 28, 1813
TO JOHN ADAMS.
Monticello, October 28, 1813.
Dear Sir,
According to the reservation between us, of taking up one of the
subjects of our correspondence at a time, I turn to your letters of
August the 16th and September the 2nd.