H. OF R.] Sub-Treasury Bill. eaten, and drunken, and worn, a little too much, and we must pay for it. How his friends can reconcile the inconsistency, it is not for me to determine. But as other gentlemen have pursued a line of argument very different from that trodden by my friend from South Carolina, it may be necessary that I should show in what they have been mistaken. They seem to think, one and all, except the honorable gentleman from South Carolina, that the increase of local banks and banking was occasioned entirely by the measures of General Jackson's administration, and in urging this charge we have been taunted with the predictions of two distinguished citizens of Massachusetts, one a member of this, [Mr. ADAMS,] and the other a member of another branch of this Government, [Mr. WEBSTER.] It is said, and I do not pretend to question it, that it was foretold by both the individuals referred to, that expansion, overtrading, pressure, and ruin, would be the result of the Executive veto of the United States Bank charter, and the withdrawal of the public money from the custody of that institution. Well might those gentlemen predict such a result, when their own immediate fellow-citizens were so actively engaged in the bringing about its fulfilment. And here permit me to make one observation, which seems to be a fair inference from the general tenor of the remarks upon this subject, that it would seem to be imputed to the friends of the late and present administrations, that they have mainly contributed to that creation of local banks and banking, under which it is alleged the country is now suffering. For the purpose of ascertaining not only the rate of increase of banking capital within the seven years, from 1830 to 1836 inclusive, and the States which have contributed to it in the largest proportions, I will present a table comprising five administration and five anti-administration States. 1836. Increase Massachusetts $20,420,000 Vermont 432,000 Maryland 6,250,495 South Carolina 4,631,000 1,875,000 $33,608,495 Increase [Oct. 12, 1837. all the five administration States just mentioned, notwithstanding that the greatest commercial city in the Union is situated in one of them! Henceforward, let no member of the opposition taunt us with the increase of local banks and banking, nor with the fulfilment of Massachusetts predictions. It is preposterous, sir, in view of these facts, to accuse General Jackson and his friends of their agency in this business. Well may it have happened that some who have made the charge were unable to see the mote in our eye, because there was a beam in their own. Suppose, then, it be conceded for this argument that local banks and issues have been inordinately increased let those who have had the largest share in the mischief take their part of the odium, and I am satisfied. But until they shall have done so, let them not again say that we did it. I might have adverted to facts in the banking history of other States, under the control of those opposed to the late and present administrations, by which the disproportion would be increased; but it cannot be necessary. As I have shown the relative increase of banks in a series of administration and antiadministration States, I will make a single observation upon the subject of the general expansion of the paper circulation, which is believed to hav occurred since the first of December, 1833. At that period, the order had been but recently issued to change the custody of the public money from the Bank of the United States to the local banks. Every one remembers the panic and pressure which existed from a short time after the meeting of Congress in 1833, to the close of that protracted session in 1834. There was no expansion, there could have been none, in the panic-stricken state of the country throughout that whole session. It is true that within a short time after the adjournment the storm subsided, and things gradually returned to their accustomed channels. What followed? It has been asserted, and, so far as I know, without 3,935,000 contradiction, that from about November, 1834, to July, 2,603,000 1835, the Bank of the United States extended its discounts 6,511,000 about twenty, and its circulation about ten millions of dol2,664,000 lars, thus taking the lead in stimulating at its commencement, and, as I believe, creating, that very spirit of speculation under which, so far as causes in this country have been concerned, we are now laboring. $53,076,000 It is true we have heard much about the effect of the specie circular in producing the present embarrassments of the country. But, for my own part, I have no doubt that $40,830,000 its effect was any thing but injurious. If its operation was 1,125,000 to restrain, as it certainly must have been, and not to stim8,203,000 ulate, the speculations in public lands, its effect could only 7,936,000 have been salutary. But I forbear to go further into that 5,116,000 subject. Before I dismiss my review of the causes which have contributed to the multiplication of local banks, and $63,210,000 the increase of their capital, I must refer to one which, 33,608,495 above all others, aside from the expanding resources and augmented population of the country, has, in my opinion, $29,601,505 been of the most efficient in bringing about that result; and that is, the rapid and final extinction of the public debt I have not considered it necessary to carry the comparsince 1829. In whatever form a promise to pay money ison further, by arraying any additional State. This se- may be made, it is credit; in all conceivable varieties, from lection probably makes it as fair as if it included all the the open account to the instrument under seal, including rest. But does not the result excite our wonder? That, bank notes and stocks, whether of corporations or the in five opposition States, containing an aggregate repre- Government, and in all these various forms may that credit sentative population of two millions and a quarter, without be used for commercial purposes. But it is not particufractions, and sending to this House forty-seven represent-larly for the purpose of illustrating the commercial uses of atives, the increase of banking capital within the period referred to should have exceeded the increase in the five administration States, containing a representative population of upwards of four millions, and sending here eightyseven representatives, by more than nine millions of dollars; and that the increase in Massachusetts alone, loyal as she is to a national bank, should exceed the increase in the evidences of the public debt, that I now speak of the effect produced, by the redemption of that debt, upon the banking institutions of the country. I intend to speak of it merely as producing a transfer of capital from one employment to another. In the year 1830, the public debt amounted to forty millions of dollars, which was redeemed in the short period of four years. The same motive which gave a preference to Government security would naturally prefer the next best security, and that security existed, or was to be obtained, by banking corporations. Hence the redemption of the public debt, at least in the commercial portions of the Union, by releasing the capital which had been invested in it, was one of the most efficient causes, I doubt not the most efficient cause, of increasing the number and capital of the local banks in that portion of the Union to which I have referred. In the younger States, where capital was scarce, other causes have been instrumental to the same result-the multiplication of banks, and the augmentation of their capital. Nor is it to be wondered at that the scarcity of a circulating medium, in the States last referred to, has been mainly instrumental in introducing the establishment of banks. When we consider a well-settled principle of trade-that a profitable channel of enterprise always, for a time, tempts adventurers into it, until its profits are brought down to the level of other pursuits, and for a time below them-especially when capital is suddenly released from other pursuits, and left unproductive in the hands of its owners, we need not doubt that much of the over-banking of this country has resulted from the redemption of the public debt. Having, as I think, acquitted the late administration of the charge of producing the banking mania which has manifested itself within the last seven years, I will proceed to inquire into the immediate causes which have produced the revulsion under which the country is now laboring. Whatever may be the opinions of others, I have no doubt that this revulsion has been occasioned by the heedless extension of credit in every form in which credit may be employed, as by bank issues, bills of exchange, &c. It may be impossible not only to ascertain what is the amount of the currency of a country, but what should be its proportion to the commerce of that country; nor is it at all material to my purpose, in regard to the present inquiry that individual or community has overtraded which cannot meet its engagements. Will any one controvert this proposition? If it be incontrovertible, and I believe it to be so, have the banks been guilty of overbanking, and the merchants of overtrading? The present condition of the country can answer this question. With a large balance of foreign debt unsatisfied, and for which there are no present means of satisfaction, who can deny that the merchants have overtraded ? And are the banks in a better condition? How stood the accounts of the late deposite banks as to immediate means and liabilities on the 15th of August? They show immediate liabilities to the amount of one hundred and four millions of dollars, and immediate means to the amount of but forty-four millions and about eight hundred and nine thousand dollars, of which only ten millions five hundred and eighty thousand dollars and a fraction was in specie. In the general account of means and liabilities, it is true that a large amount of these obligations are to the stock holders; but the fact of the great disproportion between their discounts and circulation, shows conclusively that much of the stock itself has been withdrawn from them, and exists in mere credit in the notes of the stockholders; thus showing that the supposed capital of the banks is credit, and not money. But if evidence is wanting, as conclusive as evidence can be, to prove that the banks have overtraded, it [H. OF R. For the is found in the fact that they cannot redeem their promises, ry notes, or by authorizing a loan in the ordinary way, is a matter of indifference, as it respects the obligations which will be contracted by the Government. Nor am I sufficiently versed in questions of finance to say which will be the preferable mode. But, to my mind, the most immediate and direct is the course best suited to the present wants of the Government, and that is to issue Treasury notes. Nor can it be of any very great consequence whether they are hoarded or go into general circulation. In either case, they will displace an equal amount of the present circulating medium, driving it out of or into circulation, as they may be laid up or otherwise; and if we may be permitted to look forward to their final effect, they will contribute, at no distant day, most materially to restore a sound currency. Situated as I was during the discussion of the bill to postpone the fourth instalment of deposite with the States, connected as it is with the the bills yet to be disposed of, I may be permitted, in the latitude given to the debate, to say a word or two upon it. The period of making that deposite was at hand; the Treasury had not the means of making it, nor could they be commanded without creating a public debt. Thus ne. cessarily arose the question, whether Congress had the power to tax the people to enable it to raise a fund to deposite in the treasuries of the States. To my mind, the answer was clear, that the constitution had conferred no such power upon us. If it had, the policy might well be doubt ed of taxing the people with one hand, and returning the money so raised with the other, by which they would receive it with the loss of the expense of collecting, and the interest for the time intervening between the collection and transfer, subject to the serious objection that it would never, it could never, be equitably returned to those from whom it had been collected. I have already adverted to the causes which led to the present embarrassments of the country-the overbanking and overtrading which have characterized its business transactions for the last two or three years. But as these were the remote, what was the efficient or proximate cause of the present revulsion both in Great Britain and America? I answer, the course adopted by the Bank of England when called upon to prop the falling credit of American houses, so called, but English bankers, who had gone enormously beyond their means in the acceptance of drafts from this country for which the owners had furnished no fund of redemption whatsoever. That measure of the bank not only destroyed for the time the credit of the owners of the bills referred to, but shook American credit to its foundation, and resulted in the immediate and ruinous fall in the price of the great staple of our country, by which the means of American merchants were reduced to almost onehalf the amount of their value at the time their debts were contracted. This being the fact, which none can question, is it wonderful that consternation and ruin spread over the land? If any one can doubt the effect of that measure of the bank, in applying the match which has produced this mighty explosion, he is a much greater sceptic than I am. If any other proof were wanting besides open and apparent connexion of the cause and its effect, it will be found in the existing state of the money market in Great Britain. Shortly after the Bank of England had, intentionally or unintentionally I shall not stop to inquire, knocked down the price of cotton, she came forward to sustain the private bankers who had involved themselves by their American acceptances; the London money market became easy, and we are now told that money is a drug there, and can be obtained on unquestionable security for three and half per cent. per annum, and probably much lower. Thus am I sustained in the assertion that the immediate and efficient cause of the present pecuniary condition of this country, was the conduct of the Bank of England towards the British acceptors of American bills of exchange, and the fall of [OCT. 12, 1837. cotton, which was produced by it. Panic, then, on the part of that bank, or a motive so much worse that I will no impute it, was the match that lighted up this tremendous explosion. Nor was a similar course in this country without its instrumentality, if we have been correctly informed-that from first to last there were millions of idle capital in New York, Boston, and other cities, which remained idle for want of that contidence between man and man, which is the life-blood of credit in every country in the world. I have already stated what measures might, and as I supposed would, be adopted by Congress for the relief of the country in the present extraordinary emergency: extension of time on duty bonds, and reasonable indulgence to the suspended deposite banks. But can no measures be adopted as preventives against the recurrence of a similar calamity? I think there can; and that they are to be found, not in the charter of a national bank, but in the measures proposed for ultimately collecting the public dues in the only medium recognised by the constitution as money, and in changing the mode of keeping the public revenue. But I may be asked, why not establish a national bank? I answer, first, not only because the constitution confers no power to do so, either in terms or by rational inference, but its history forbids the implication of it in the fact that the federal convention was asked to confer it, and it refused peremptorily to do so. I will not so far insult the committee as to go over the argument to show how far any doubt arising upon the face of an instrument is to be settled by a reference to its history. In the next place I answer, that if the power had been explicitly granted in the constitution, it would be inexpedient to exercise it. It would be inexpedient, first, because the whole history of the late national bank, and its successor, the United States Bank of Pennsylvania, conclusively shows, that it cannot, or it will not, prevent overbanking, and consequent overtrading, through the instrumentality of the local banks. New as I may be to public affairs, I have not forgotten the history of the commercial embarrassment which reached its acme in 1819, less than three years from the time when the United States Bank, established avowedly to prevent the future recurrence of excessive local bank circulation, had gone into operation; an embarrassment occasioned by the same spirit of reckless adventure in public lands, and every thing else that could be made the subject of speculation, which characterized the money transactions of the country in 1835 and 1836. If there are any here too young to remember, or who have been too indolent to acquire, information upon that subject, it is sufficient to point them to the impotence of the Pennsylvania Bank of the United States, avowed by its president within two short years to be stronger than its predecessor, to ward off such a calamity. It is true, that when its suspension was announced in May last, its presiding officer informed the country that if it had consulted its own strength, that suspension would not have been necessary. But, if the fact was as he stated, how much worse was that act than it has been characterized by a distinguished individual to whom the declaration was made let an insulted and injured people decide. If it was true, there are no terms of condemnation known to human language strong enough to express the execration which it merits. But there is another, and, to my mind, equally strong, or stronger, if possible, objection to the establishment of a national bank. It is the political character assumed by the late bank, especially when coupled with its foreign connexions. To the employment of foreign capital, wielded by American hands, directed by American hearts, in furtherance of objects of public or private enterprise, I make no objection. But I protest most solemnly against permitting in its use the shadow of foreign control or direction. The late Bank of the United States was believed to have been influenced in its political course by foreign stockholders, not only having no sympathy with our political institutions, but hostile to them. If it was so and of the fact there can be little or no doubt-how much closer is the connexion of its successor with foreigners, how much more powerful will be their influence over it, let recent facts, showing the establishment of its agencies in Liverpool and London, attest. Let me not be answered that a national bank is advocated. I am not to be misled by such a declaration, from my firm conviction that the war upon the late and present administrations of this Government was and is waged for the revival of the Bank of the United States. [H. of R. one currency for the Government and another for the people. But how such an objection can be sustained I cannot imagine. Gentlemen, in making it, would seem to confound the present condition of bank paper with what would be widely different, if it possessed the supposed convertibility, the only element which can entitle it to the character of money. If the operation of the system of specie payments should be such as to bring back the banks to the fair and proper redemption of their notes, I would ask in what essential particular would the one currency differ from the other? In fact, the whole currency of the country would then consist of specie or credits equivalent: a result which would do more to prevent the indulgence of rash and ruinous speculation, than any other measure the Government could adopt short of the entire destruction of that system of commercial credit which, properly controlled by prudent foresight and economy, is so essential to the maintainance of our national and individual prosperity. If I have been so fortunate as to make my meaning understood, I think I have shown that the scheme proposed would establish a currency of equal value to the Government and the people, and such an one as would lay the fabagain shaken down by such revulsions as have occurred, at least on two occasions, within less than the last twenty years. Having shown, as I think, that such an institution is not only unconstitutional, but dangerous to the constitution itself, I come to the measures which, in my judgment, are best calculated to save the country, so far as our legislation can save it, from future revulsion and embarrassment; and here I take occasion to say, that no fiee Government can so legislate as entirely to prevent their recurrence. But, before proceeding to consider the measures referred to, I may be permitted to state one other objection to the estab-rick of our prosperity on foundations too stable ever to be lishment of a national bank: it is the clearly and strongly expressed decision of the people against it. In discussing the measures most likely so to check and control the local banks, as to restrain their issues within safe and proper limits, I will first consider the proposition to require all payments to the Government to be ultimately made in the constitutional coin of the country, and in that only. It has been said by gentlemen opposed to this, what they call innovation, that it is calculated and intended to destroy the system of credit upon which this country has reached its present elevated rank among the nations of the world. But in what manner can it effect such a result? Is any member of this committee prepared to permit the debts due to the Government to be discharged in irredeemable and inconvertible paper? If not, who can entertain a reasonable objection to requiring their payment, not in promises, but money? Where would be the difference between the payment of coin or bank notes, convertible into it at the will of the holder, in its effect upon the interest of the banks? If they should be always ready, as they certainly should be, to redeem their notes at the will of the holder, what hardship can there be in requiring that the Government debtor shall so convert them without making it necessary that it should be done by the collecting officers of the GovernIneat? It may be said that, as it would only be a question of convenience between private individuals and the collecting officers, the convenience of the community should always be preferred. But, upon a closer examination, it will be found that,e ven upon this point, there is no equality whatsoever. The collecting agents of the Government may be engaged, and in the large importing cities will certainly be almost constantly, in receiving money for the Government; therefore it is much more reasonable that individuals should convert their bank notes into specie before making payment to the collecting agents of the Government, than that the whole burden should fall upon these agents. But I apprehend, that to require payment to the Government in coin, in every instance, will have a salutary influence upon specie paying banks, so called, in restraining imprudent issues of paper by them. That no injustice would be done either to individuals or the banks, upon the principle that all bank paper shall be convertible into specie, by the adoption of the scheme proposed, is, to my mind, as clear and conclusive as mathematical demonstration could make it. But we have heard it said by the opponents of this measure, who are alike the opponents of the late and present administrations, with, perhaps, occasional exceptions, that by this scheme we should create In the discussion which has taken place upon the various propositions presented by the Committee of Ways and Means, in conformity to Executive recommendation, we have heard much about taking care of the Government and neglecting the people. What, sir, is the Government? It is but an agency constituted by the people themselves, for the promotion of their own prosperity and happiness. And what, I would ask, is desired in the measures proposed for the relief of the Government, but to give it the means of carrying out the will of the people? To my mind, it is the idlest of all clamors to say, that, because we intend to place the Government in a condition to execute the purpose of its creation, that purpose being to secure the public prosperity and happiness, we are providing for the Government, as something distinct from, and opposed to, the interests of the people. The last particular topic upon which I desire to offer a few observations to the consideration of the committee, is the mode proposed for the safe-keeping of the public revenue. And what is that mode, stripped of all the mystery and disguise which has been attempted to be thrown around it, by the incessant outcry of exchequer banks, Treasury bank, sub-Treasury system, and all the et ceteras gentlemen have applied to it? Nothing more nor less than the plain republican, unsophisticated scheme of requiring the receivers of the public revenue to be answerable for its safe-keeping. What feature of a bank can it be possibly supposed to possess? It is not contemplated to authorize the issue of paper of any kind as the mere representative of the money so deposited for safe-keeping. All that is intended, beyond the payment of money, upon properly authorized drafts from the Treasury, to the public creditors, is the occasional transfer of it, as circumstances may require, from one place to another, for the disbursements of the Government. It is not, thereforeit cannot in any sense be so considered-a bank of any sort whatever. What, then, are the objections to it? That it will increase the patronage of the Government, by the increase of public officers, and the additional expenditure necessary. for their compensation; that the money will be unsafe in the custody of the public officers; and that it will open the door to the corrupt influence of the Executive, and may lead to the establishment of an odious despotism upon the ruins of the constitution. The very decisive vote which has been recently given, here and elsewhere, on the sub H. OF R.] Sub-Treasury Bill. [OCT. 12, 1837. dividuals. But it is said that, allowing that public collecting officers are generally as honest as the officers of banks, yet the stock of the latter furnishes better security than an individual can offer. On this point I am at issue with the objector, and say that the public officer will be able to make the Government as secure as the banks. ject of a national bank, renders it unnecessary for me to dis-ity has nothing to boast of when compared with that of incuss its merit as a public depository. The only comparison which it is then necessary to institute is, between the system pursued and a return to the employment of the local banks. Nor does it seem material to carry that comparison further than the consideration of the objections just stated to the placing the custody of the revenue in the hands of the collecting officers of the Government. So far as I have heard, no one is willing to restore the revenue to the custody of the banks, upon any other principle than as a special deposite, not to be used by them for any purpose, and to be paid over to the orders of the Treasury whenever it may be required. Nor is it proposed, so far as I have understood, to ask the banks to perform this service without just compensation. What compensation, I would ask, do gentlemen suppose they would require for such service, including the risk of safely keeping the public money? I know but little of banking transactions, but have little doubt the service required would not be performed by them for less than one per centum upon the money committed to their charge. Taking, then, the public revenue at twenty millions per annum, and the cost of its custody would be two hundred thousand dollars. But, that I may be within the rate which must be conceded by every one as low enough, I will fix it at one-half of one per cent., and the annual expense will be one hundred thousand dollars; a sum larger by forty thousand dollars than the sum estimated by the Secretary of the Treasury, if it shall be committed to the collecting agents of the Government. On the score of economy, therefore, the calculation is decidedly in favor of the system proposed. But to the question of patronage. How much will Executive patronage be increased by the appointment of a small additional number of clerks in some half a dozen cities or less in this Union? So far from being increased, it will be lessened in comparison with the numerous banks which would seek the custody of the public money, and to which it would be committed, the compensation being made an object to them, and without it they would not assume the responsibility, by a President desirous to establish the reign of influence and corruption. It may be answered, that there would be less danger of a corrupt use of the public money, if placed in the keeping of the banks, than in the hands of public officers. For my part, I cannot perceive the force of such an objection. Is it said that there is danger of servility on account of dependence of public agents upon the Executive for their offices? The question is then resolved into a question of money, and as that reduces the objection against the public officers and the bank to the same principle, it is unworthy of further consideration. But, it may be said that the chances of Executive corruption will be increased by the greater facility of obtaining money from public officers than from the banks. To this, I answer, that there can be no possible difference in the matter. The same checks and control exist in the one case as the other. And the banks are as much bound to answer the drafts of the public Treasury, as the public officers could be, and would as readily answer them. Human nature is essentially the same under equal circumstances, and the officers of banks would be quite as likely to act under the influence of temptation to execute a corrupt Executive will, sufficient inducements being offered, as would the collecting officers of the Government. I come now to the only remaining questionthe question of the safety of the public revenue under the system proposed. And in discussing this question, I must be permitted to inquire, what magic is imparted by an act of incorporation, by which the hone ty of men becomes so purified and refined, that they are placed above the ordinary level of their race? If the homely proverb of an English lawyer of former days be true, corporation moral But, if it were allowed that occasional default might be the consequence of confiding the custody of the public money to the collecting officers, how long would it be before it would amount to the loss and inconvenience already experienced by employing the banks, and receiving bank paper in payment for public lands before the system of cash payments was adopted, or the inconvenience already experienced within the last five months, not to say-for yet it cannot be said-what losses may in the end be sustained in the debts now due by the late deposite banks? When Mr. HAYNES had taken his seat Mr. CALHOUN, of Mass., rose and said: An attempt had been made during the discussions of this session to give to the financial system of this country a new character, an impression of novelty, an air of mystification. Gentlemen who had taken a prominent part in the discussions in this hall and elsewhere, had spoken of an extraordinary crisis in the monetary affairs of the age, a development of principles hitherto unknown or not acted upon, of a great financial theorem or issue of modern times. This pretension seems to me (said Mr. C.) to be an arrogant one, if honestly believed; and, if not, to be intended solely to cover over some most singular changes of opinion. Whatever may be the truth in this regard, certainly these assumptions have their origin in an undue fondness for theorizing and speculating. I have no antipathy to a spirit of this kind, if kept within proper bounds, and applied to suitable objects. In all that can contribute to human happiness, or that may tend to elevate the mass of mankind, I have the strongest sympathy with those who are philanthropically engaged in pointing out a new and better way, and for the abundant reason that they are giving their thoughts to what, unfortunately, does not attract the universal or even general interest of our race. But, in reference to subjects which are of every day concern, which enter into the constant business of existence, and which form an essential and prominent feature in all the aims and objects of the industry of our country, I cannot but look upon this undue attachment to theory as a sore evil. The subject of finance is peculiarly practical, and minds of a practical cast are almost the only ones that master its details, and meet with success in its pursuit. Whatever pertains to the finances of the country, to its business, and its currency, is better, far better understood by men whose lives are devoted to that business, by men of large and long-earned experience, than by any mere politicians, however ingeniously or adroitly they may theorize. And certain it is that, in this country, and in every country where civilization and intelligence have left their mark, the wisest, profoundest, and most successful statesmen have been those who, in their financial systems, have drawn most extensively upon the resources and experience of men of practical business. The mingling of matters of business and of financial institutions with partisan politics I look upon as the cursethe very evil genius of our country. It is this which lies at the bottom of all our troubles and distresses as a people, and which causes the administration of the Government to be so loudly and emphatically complained against. So long as the politicians continue to drag the business of the country within the vortex of politics, and to make it tributary to their own personal aggrandizement, to their own unpatriotic objects, so long will derangement and distraction reign in both. We were yesterday asked quite imposingly by the gen |