and greatly depreciated. I think they will. It would be a wonder if they should not. This effect will be produced by that excessive issue of its paper which the bank must make in its loan to government. Whether its issues of paper are excessive will depend, not on the nominal amount of its capital, but on its ability to redeem it. This is the only safe criterion. Very special cases may perhaps furnish exceptions, but there is, in general, no security for the credit of paper, but the ability in those who emit to redeem it. Whenever bank-notes are not convertible into gold and silver at the will of the holder, they become of less value than gold and silver. All experiments on this subject have come to the same result. It is so clear, and has been so universally admitted, that it would be waste of time to dwell upon it. The depreciation may not be sensibly perceived the first day, or the first week, it takes place. It will first be discerned in what is called the rise of specie; it will next be seen in the increased price of all commodities. The circulating medium of a commercial community must be that which is also the circulating medium of other commercial communities, or must be capable of being converted into that medium without loss. It must be able, not only to pass in payments and receipts among individuals of the same society and nation, but to adjust and discharge the balance of exchanges between different nations. It must be something which has a value abroad, as well as at home, and by which foreign as well as domestic debts can be satisfied. The precious metals alone answer these purposes. They alone, therefore, are money, and whatever else is to perform the offices of money must be their representative, and capable of being turned into them at will. So long as bank paper retains this quality, it is a substitute for money; divested of this, nothing can give it that character. No solidity of funds, no sufficiency of assets, no confidence in the solvency of banking institutions, has ever enabled them to keep up their paper to the value of gold and silver any longer than they paid gold and silver for it, on demand. This will continue to be the case so long as those metals shall continue to be the standard of value and the general circulating medium among nations.

A striking illustration of this common principle is found in the early history of the Bank of England. In the year 1697, it had been so liberal of its loans, that it was compelled to sus

pend the payment of its notes. Its paper immediately fell to a discount of near twenty per cent. Yet such was the public opinion of the solidity of its funds, that its stock then sold for one hundred and ten per cent., although no more than sixty per cent. upon the subscription had been paid in. The same fate, as is well known, attended the banks of Scotland, when they adopted the practice of inserting in their notes a clause, giving the banks an option of paying their notes on demand, or six months after demand, with interest. Paper of this sort was not convertible into specie, at the pleasure of the holder; and no conviction of the ability of the bank which issued it could preserve it from depreciation.

The suspension of specie payments by the Bank of England, in 1797, and the consequences which followed, afford no argument to overthrow this general experience. If Bank of England notes were not immediately depreciated on that occasion, depreciation, nevertheless, did ensue. Very favorable causes existed to prevent their sudden depression. It was an old and rich institution. It was known to be under the most discreet and independent management. Government had no control over it, to force it to make loans against its interest or its will. On the contrary, it compelled the government to pay, though with much inconvenience to itself, a very considerable sum which was due to it. The country enjoyed, at that time, an extensive commerce, and a revenue of three hundred millions of dollars was collected and distributed through the bank. Under all these advantages, however, the difference of price between bank-notes and coin became at one time so great, as to threaten the most dangerous consequences. Suppose the condition of England to have been reversed.. Suppose that, instead of a prosperous and increasing commerce, she had suffered the ruin of her trade, and that the product of her manufactures had lain upon her hands, as the product of our agriculture now perishes in ours. Does any one imagine that her circulating paper could have existed and maintained any credit, in such a change of her condition? What ought to surprise us is, not that her bank paper was depreciated, but that it was not depreciated sooner and lower than in fact it was. The reason can only be found in that extraordinary combination of favorable circumstances, which never existed before, and is hardly to be expected again. Much less is it to be discovered in our condition at present.

But we have experience nearer home. The paper of all the banks south of New England has become depreciated to an alarming extent. This cannot be denied. The idea that this depreciation exists only at a distance from the banks respectively is unfounded and absurd. It exists everywhere. The rates of exchange, both foreign and domestic, put this point beyond controversy. If a bill of exchange on Europe can be purchased, as it may, twenty per cent. cheaper in Boston than in Baltimore, the reason must be that it is paid for in Boston in money, and in Baltimore in something twenty per cent. less valuable than money. Notwithstanding the depression of their paper, it is not probable that any doubt is entertained of the sufficiency of the funds of the principal banks. Certainly no such doubt is the cause of the fall of their paper; because the depression of the paper of all the banks in any place is, as far as I learn, generally uniform and equal; whereas, if public opinion proceeded at all upon the adequacy or inadequacy of their funds, it would necessarily come to different results in different cases, as some of these institutions must be supposed to be richer than others.

Sir, something must be discovered which has hitherto escaped the observation of mankind, before you can give to paper intended for circulation the value of a metallic currency, any longer than it represents that currency, and is convertible into it, at the will of the holder. The paper of this bank, if you make it, will be depreciated, for the same reason that the paper of other banks that have gone before it, and of those which now exist around us, has been depreciated, because it is not to pay specie for its notes. Other institutions, setting out perhaps on honest principles, have fallen into discredit, through mismanagement or misfortune. But this bank is to begin with insolvency. It is to issue its bills to the amount of thirty millions, when every body knows it cannot pay them. It is to commence its existence in dishonor. It is to draw its first breath in disgrace. The promise contained in the first note it sends forth is to be a false promise, and whoever receives the note is to take it with the knowledge that it is not to be paid according to the terms of it.

But this, Sir, is not all. The framers of this bill have not done their work by halves. They have put the depreciation of the notes of their bank beyond all doubt or uncertainty. They

have made assurance doubly sure. In addition to excessive issues of paper, and the failure to make payments, both which they provide for by law, they make the capital of the bank to consist principally of public stock. If this stock should be sold as in the former Bank of the United States, the evil would be less. But the bank has not the power to sell it, and, for all purposes of enabling it to fulfil its engagements, its funds might as well be at the bottom of the ocean as in government stocks, of which it cannot enforce payment, and of which it cannot dispose. The credit of this institution is to be founded on public funds, not on private property or commercial credit. It is to be a financial, not a commercial bank. Its credit can hardly, therefore, be better at any time than the credit of the government. If the stocks be depreciated, so of course must every thing be which rests on the stocks. It would require extraordinary ingenuity to show how a bank, which is founded on the public debt, is to have any better reputation than the debt itself. It must be some very novel invention which makes the superstructure keep its place after the foundation has fallen. The argument seems to stand thus. The public funds, it is admitted, have little credit; the bank will have no credit which it does not borrow of the funds; but the bank will be in full credit.

If, Sir, we were in a temper to learn wisdom from experience, the history of most of the banks on the continent of Europe. might teach us the futility of all these contrivances. Those institutions, like this before us, were established for purposes of finance, not purposes of commerce. The same fortune has hap

pened to them all. Their credit has sunk. Their respective governments go to them for money when they can get it nowhere else; and the banks can relieve their wants only by new issues of their own paper. As this is not redeemed, the invariable consequence of depreciation follows; and this has sometimes led to the miserable and destructive expedient of depreciation of the coin itself. Such are the banks of Petersburg, Copenhagen, Vienna, and other cities of Europe; and while the paper of these government banks has been thus depressed, that of other banks existing in their neighborhood, unconnected with government, and conducting their business on the basis of commercial credit, has retained a value equivalent to that of coin.

Excessive issues of paper, and a close connection with govern

ment, are the circumstances which of all others are the most certain to destroy the credit of bank paper. If there were no excessive issues, or, in other words, if the bank paid its notes in specie on demand, its connection with government and its interest in the funds would not, perhaps, materially affect the circulation of its paper, although they would naturally diminish the value of its stock. But when these two circumstances exist in the condition of any bank, that it does not pay its notes, and that its funds are in public stocks, and all its operations intimately blended with the operations of government, nothing further need be known, to be quite sure that its paper will not answer the purpose of a creditable circulating medium.

I look upon it, therefore, Sir, as certain, that a very considerable discount will attach itself to the notes of this bank the first day of their appearance; that this discount will continue to increase; and unless Congress should be able to furnish some remedy which is not certain, the paper, in the end, will be worth nothing. If this happens, not only will no one of the benefits proposed be obtained, but evils of the most alarming magnitude will follow. All the horrors of a paper-money system are before If we venture on the present expedient, we shall hardly be able to avoid them. The ruin of public affairs and the wreck of private property will ensue.

us.

I would ask, Sir, whether the friends of this measure have well considered what effect it will produce on the revenue of the country? By the provisions of this bill, the notes of this bank are to be received in payment of all taxes and other dues to government. They cannot be refused on account of the depreciation of their value. Government binds itself to receive them at par, although it should be obliged immediately to pay them out at a discount of a hundred per cent. It is certain, then, that a loss in the revenue will be sustained, equal to any depreciation which may take place in this paper; and when the paper shall come to nothing, the revenue of the country will come to nothing along with it. This has happened to other countries where this wretched system has been adopted, and it will happen here. The Austrian government resorted to a similar experiment in a very critical period of its affairs, in 1809, the year of the last campaign between that country and France previous to the coalition. Pressed by the necessities of the occasion, the gov