ATTACKS ON THE MESSAGE: TREASURY NOTES.
Under the first two of our Presidents, Washington, and the first
Mr. Adams, the course of the British Parliament was followed in
answering the address of the President, as the course of the
sovereign was followed in delivering it. The Sovereign delivered his
address in person to the two assembled Houses, and each answered
it: our two first Presidents did the same, and the Houses answered.
The purport of the answer was always to express a concurrence, or
non-concurrence with the general policy of the government as thus
authentically exposed; and the privilege of answering the address
laid open the policy of the government to the fullest discussion.
The effect of the practice was to lay open the state of the
country, and the public policy, to the fullest discussion; and, in
the character of the answer, to decide the question of accord or
disaccord--of support or opposition--between the representative
and the executive branches of the government. The change from the
address delivered in person, with its answer, to the message sent
by the private secretary, and no answer, was introduced by Mr.
Jefferson, and considered a reform; but it was questioned at the
time, whether any good would come of it, and whether that would not
be done irregularly, in the course of the debates, which otherwise
would have been done regularly in the discussion of the address. The
administration policy would be sure to be attacked, and irregularly,
in the course of business, if the spirit of opposition should not
be allowed full indulgence in a general and regular discussion. The
attacks would come, and many of Mr. Jefferson's friends thought
it better they should come at once, and occupy the first week or
two of the session, than to be scattered through the whole session
and mixed up with all its business. But the change was made, and
has stood, and now any bill or motion is laid hold of, to hang a
speech upon, against the measures or policy of an administration.
This was signally the case at this extra session, in relation to
Mr. Van Buren's policy. He had staked himself too decisively
against too large a combination of interests to expect moderation
or justice from his opponents; and he received none. Seldom has any
President been visited with more violent and general assaults than
he received, almost every opposition speaker assailing some part of
the message. One of the number, Mr. Caleb Cushing, of Massachusetts,
made it a business to reply to the whole document, formally and
elaborately, under two and thirty distinct heads--the number of
points in the mariner's compass: each head bearing a caption to
indicate its point: and in that speech any one that chooses, can
find in a condensed form, and convenient for reading, all the points
of accusation against the democratic policy from the beginning of
the government down to that day.
Mr. Clay and Mr. Webster assailed it for what it contained, and
for what it did not--for its specific recommendations, and for its
omission to recommend measures which they deemed necessary. The
specie payments--the disconnection with banks--the retention of
the fourth instalment--the bankrupt act against banks--the brief
issue of treasury notes; all were condemned as measures improper
in themselves and inadequate to the relief of the country: while,
on the other hand, a national bank appeared to them to be the
proper and adequate remedy for the public evils. With them acted
many able men:--in the Senate, Bayard, of Delaware, Crittenden, of
Kentucky, John Davis, of Massachusetts, Preston, of South Carolina,
Southard, of New Jersey, Rives, of Virginia:--in the House of
Representatives, Mr. John Quincy Adams, Bell, of Tennessee, Richard
Biddle, of Pennsylvania, Cushing, of Massachusetts, Fillmore, of New
York, Henry Johnson, of Louisiana, Hunter and Mercer, of Virginia,
John Pope, of Kentucky, John Sargeant, Underwood of Kentucky,
Lewis Williams, Wise. All these were speaking members, and in
their diversity of talent displayed all the varieties of effective
speaking--close reasoning, sharp invective, impassioned declamation,
rhetoric, logic.
On the other hand was an equal array, both in number and
speaking talent, on the other side, defending and supporting the
recommendations of the President:--in the Senate, Silas Wright,
Grundy, John M. Niles, King, of Alabama, Strange, of North
Carolina, Buchanan, Calhoun, Linn, of Missouri, Benton, Bedford
Brown, of North Carolina, William Allen, of Ohio, John P. King, of
Georgia, Walker, of Mississippi:--in the House of Representatives,
Cambreleng, of New York, Hamer, of Ohio, Howard and Francis Thomas,
of Maryland, McKay, of North Carolina, John M. Patton, Francis
Pickens.
The treasury note bill was one of the first measures on which the
struggle took place. It was not a favorite with the whole body of
the democracy, but the majority preferred a small issue of that
paper, intended to operate, not as a currency, but as a ready means
of borrowing money, and especially from small capitalists; and,
therefore, preferable to a direct loan. It was opposed as a paper
money bill in disguise, as germinating a new national debt, and as
the easy mode of raising money, so ready to run into abuse from
its very facility of use. The President had recommended the issue
in general terms: the Secretary of the Treasury had descended into
detail, and proposed notes as low as twenty dollars, and without
interest. The Senate's committee rejected that proposition, and
reported a bill only for large notes--none less than 100 dollars,
and bearing interest; so as to be used for investment, not
circulation. Mr. Webster assailed the Secretary's plan, saying--
"He proposes, sir, to issue treasury notes of small
denominations, down even as low as twenty dollars, not bearing
interest, and redeemable at no fixed period; they are to be
received in debts due to government, but are not otherwise to
be paid until at some indefinite time there shall be a certain
surplus in the treasury beyond what the Secretary may think its
wants require. Now, sir, this is plain, authentic, statutable
paper money; it is exactly a new emission of old continental.
If the genius of the old confederation were now to rise up in
the midst of us, he could not furnish us, from the abundant
stores of his recollection, with a more perfect model of paper
money. It carries no interest; it has no fixed time of payment;
it is to circulate as currency, and it is to circulate on the
credit of government alone, with no fixed period of redemption!
If this be not paper money, pray, sir, what is it? And, sir,
who expected this? Who expected that in the fifth year of the
_experiment for reforming the currency_, and bringing it to an
absolute gold and silver circulation, the Treasury Department
would be found recommending to us a regular emission of
paper money? This, sir, is quite new in the history of this
government; it belongs to that of the confederation which has
passed away. Since 1789, although we have issued treasury notes
on sundry occasions, we have issued none like these; that is
to say, we have issued none not bearing interest, intended for
circulation, and with no fixed mode of redemption. I am glad,
however, Mr. President, that the committee have not adopted the
Secretary's recommendation, and that they have recommended the
issue of treasury notes of a description more conformable to the
practice of the government."
Mr. Benton, though opposed to the policy of issuing these notes,
and preferring himself a direct loan in this case, yet defended the
particular bill which had been brought in from the character and
effects ascribed to it, and said:
"He should not have risen in this debate, had it not been for
the misapprehensions which seemed to pervade the minds of some
senators as to the character of the bill. It is called by some
a paper-money bill, and by others a bill to germinate a new
national debt. These are serious imputations, and require to be
answered, not by declamation and recrimination, but by facts and
reasons, addressed to the candor and to the intelligence of an
enlightened and patriotic community.
"I dissent from the imputations on the character of the bill. I
maintain that it is neither a paper-money bill, nor a bill to
lay the foundation for a new national debt; and will briefly
give my reasons for believing as I do on both points.
"There are certainly two classes of treasury notes--one for
investment, and one for circulation; and both classes are
known to our laws, and possess distinctive features, which
define their respective characters, and confine them to their
respective uses.
"The notes for investment bear an interest sufficient to induce
capitalists to exchange gold and silver for them, and to lay
them by as a productive fund. This is their distinctive feature,
but not the only one; they possess other subsidiary qualities,
such as transferability only by indorsement--payable at a
fixed time--not re-issuable--nor of small denomination--and
to be cancelled when paid. Notes of this class are, in fact,
loan notes--notes to raise loans on, by selling them for hard
money--either immediately by the Secretary of the Treasury, or,
secondarily, by the creditor of the government to whom they
have been paid. In a word, they possess all the qualities which
invite investment, and forbid and impede circulation.
"The treasury notes for currency are distinguished by
features and qualities the reverse of those which have been
mentioned. They bear little or no interest. They are payable
to bearer--transferable by delivery--re-issuable--of low
denominations--and frequently reimbursable at the pleasure of
the government. They are, in fact, paper money, and possess
all the qualities which forbid investment, and invite to
circulation. The treasury notes of 1815 were of that character,
except for the optional clause to enable the holder to fund them
at the interest which commanded loans--at seven per cent.
"These are the distinctive features of the two classes of notes.
Now try the committee's bill by the test of these qualities.
It will be found that the notes which it authorizes belong
to the first-named class; that they are to bear an interest,
which may be six per cent.; that they are transferable only by
indorsement; that they are not re-issuable; that they are to be
paid at a day certain--to wit, within one year; that they are
not to be issued of less denomination than one hundred dollars;
are to be cancelled when taken up; and that the Secretary of the
Treasury is expressly authorized to raise money upon them by
loaning them.
"These are the features and qualities of the notes to be issued,
and they define and fix their character as notes to raise loans,
and to be laid by as investments, and not as notes for currency,
to be pushed into circulation by the power of the government;
and to add to the curse of the day by increasing the quantity of
unconvertible paper money."
Though yielding to an issue of these notes in this particular form,
limited in size of the notes to one hundred dollars, yet Mr. Benton
deemed it due to himself and the subject to enter a protest against
the policy of such issues, and to expose their dangerous tendency,
both to slide into a paper currency, and to steal by a noiseless
march into the creation of public debt, and thus expressed himself:
"I trust I have vindicated the bill from the stigma of being a
paper currency bill, and from the imputation of being the first
step towards the creation of a new national debt. I hope it is
fully cleared from the odium of both these imputations. I will
now say a few words on the policy of issuing treasury notes
in time of peace, or even in time of war, until the ordinary
resources of loans and taxes had been tried and exhausted. I am
no friend to the issue of treasury notes of any kind. As loans,
they are a disguised mode of borrowing, and easy to slide into
a currency: as a currency, it is the most seductive, the most
dangerous, and the most liable to abuse of all the descriptions
of paper money. 'The stamping of paper (by government) is
an operation so much easier than the laying of taxes, or of
borrowing money, that a government in the habit of paper
emissions would rarely fail, in any emergency, to indulge itself
too far in the employment of that resource, to avoid as much as
possible one less auspicious to present popularity.' So said
General Hamilton; and Jefferson, Madison Macon, Randolph, and
all the fathers of the republican church, concurred with him.
These sagacious statesmen were shy of this facile and seductive
resource, 'so liable to abuse, and so certain of being abused.'
They held it inadmissible to recur to it in time of peace,
and that it could only be thought of amidst the exigencies
and perils of war, and that after exhausting the direct and
responsible alternative of loans and taxes. Bred in the school
of these great men, I came here at this session to oppose, at
all risks, an issue of treasury notes. I preferred a direct
loan, and that for many and cogent reasons. There is clear
authority to borrow in the constitution; but, to find authority
to issue these notes, we must enter the field of constructive
powers. To borrow, is to do a responsible act; it is to incur
certain accountability to the constituent, and heavy censure
if it cannot be justified; to issue these notes, is to do an
act which few consider of, which takes but little hold of the
public mind, which few condemn and some encourage, because it
increases the quantum of what is vainly called money. Loans
are limited by the capacity, at least, of one side to borrow,
and of the other to lend: the issue of these notes has no
limit but the will of the makers, and the supply of lamp-black
and rags. The continental bills of the Revolution, and the
assignats of France, should furnish some instructive lessons
on this head. Direct loans are always voluntary on the part of
the lender; treasury note loans may be a forced borrowing from
the government creditor--as much so as if the bayonet were put
to his breast; for necessity has no law, and the necessitous
claimant must take what is tendered, whether with or without
interest--whether ten or fifty per cent. below par. I distrust,
dislike, and would fain eschew, this treasury note resource. I
prefer the direct loans of 1820-'21. I could only bring myself
to acquiesce in this measure when it was urged that there was
not time to carry a loan through its forms; nor even then could
I consent to it, until every feature of a currency character had
been eradicated from the face of the bill."
The bill passed the Senate by a general vote, only Messrs. Clay,
Crittenden, Preston, Southard, and Spence of Maryland, voting
against it. In the House of Representatives it encountered a more
strenuous resistance, and was subjected to some trials which showed
the dangerous proclivity of these notes to slide from the foundation
of investment into the slippery path of currency. Several motions
were made to reduce their size--to make them as low as $25; and that
failing, to reduce them to $50; which succeeded. The interest was
struck at in a motion to reduce it to a nominal amount; and this
motion, like that for reducing the minimum size to $25, received a
large support--some ninety votes. The motion to reduce to $50 was
carried by a majority of forty. Returning to the Senate with this
amendment, Mr. Benton moved to restore the $100 limit, and intimated
his intention, if it was not done, of withholding his support from
the bill--declaring that nothing but the immediate wants of the
Treasury, and the lack of time to raise the money by a direct loan
as declared by the Secretary of the Treasury, could have brought him
to vote for treasury notes in any shape. Mr. Clay opposed the whole
scheme as a government bank in disguise, but supported Mr. Benton's
motion as being adverse to that design. He said:
"He had been all along opposed to this measure, and he saw
nothing now to change that opinion. Mr. C. would have been glad
to aid the wants of the Treasury, but thought it might have been
done better by suspending the action of many appropriations not
so indispensably necessary, rather than by resorting to a loan.
Reduction, economy, retrenchment, had been recommended by the
President, and why not then pursued? Mr. C.'s chief objection,
however, was, that these notes were mere post notes, only
differing from bank notes of that kind in giving the Secretary a
power of fixing the interest as he pleases.
"It is, said Mr. C., a government bank, issuing government
bank notes; an experiment to set up a government bank. It
is, in point of fact, an incipient bank. Now, if government
has the power to issue bank notes, and so to form indirectly
and covertly a bank, how is it that it has not the power to
establish a national bank? What difference is there between a
great government bank, with Mr. Woodbury as the great cashier,
and a bank composed of a corporation of private citizens? What
difference is there, except that the latter is better and safer,
and more stable, and more free from political influences,
and more rational and more republican? An attack is made at
Washington upon all the banks of the country, when we have at
least one hundred millions of bank paper in circulation. At
such a time, a time too of peace, instead of aid, we denounce
them, decry them, seek to ruin them, and begin to issue paper in
opposition to them! You resort to paper, which you profess to
put down; you resort to a bank, which you pretend to decry and
to denounce; you resort to a government paper currency, after
having exclaimed against every currency except that of gold and
silver! Mr. C. said he should vote for Mr. Benton's amendment,
as far as it went to prevent the creation of a government bank
and a government currency."
Mr. Webster also supported the motion of Mr. Benton, saying:
"He would not be unwilling to give his support to the bill, as a
loan, and that only a temporary loan. He was, however, utterly
opposed to every modification of the measure which went to
stamp upon it the character of a government currency. All past
experience showed that such a currency would depreciate; that
it will and must depreciate. He should vote for the amendment,
inasmuch as $100 bills were less likely to get into common
circulation than $50 bills. His objection was against the old
continental money in any shape or in any disguise, and he would
therefore vote for the amendment."
The motion was lost by a vote of 16 to 25, the yeas and nays being:
YEAS--Messrs. Allen, Benton, Clay, of Kentucky, Clayton, Kent,
King, of Georgia, McKean, Pierce, Rives, Robbins, Smith, of
Connecticut, Southard, Spence, Tipton, Webster, White--16.
NAYS--Messrs. Buchanan, Clay, of Alabama, Crittenden, Fulton,
Grundy, Hubbard, King, of Alabama, Knight, Linn, Lyon, Morris,
Nicholas, Niles, Norvell, Roane, Robinson, Smith, of Indiana,
Strange, Swift, Talmadge, Walker, Williams, Wall, Wright,
Young--25.