vorites of the bank have so contrived to have half the property of the rest of the community transferred to them, it becomes a matter of inquiry whether it be most to their interest to commence another operation by "expanding" again, or to stop payment and blow up, leaving their creditors to seek their remedy out of an empty corporation. If they commence business again, new life is infused into the community; business again becomes brisk, in the same way, until the proper time for any other curtailment arrives, when the same scenes of distress and panic, sacrifice of property, and ruin, are acted over again. Thus, by alternate contractions and expansions which this bank is enabled to make, and from which its officers and stockholders derive their profits, this little community is kept in a continual fever, first of speculation, then the dubious and restless state between hope and despair, and, finally, the ruin of many; and the few who manage its concerns are daily growing rich, and become the lords and disposers of the property of others, while their more industrious neighbors are their slaves. This epitome may be somewhat overdrawn in its details; but let him who doubts the truth of the representation, in the general outlines, as containing a fair picture of our banking systems, read the history of this country during the years 1818, 1819, and 1820. Let him trace the wild schemes of speculation and extravagance which prevailed for the few years previous, immediately on the heels of the litters of banks chartered by the Middle States from 1814 till 1817, the charter of the United States Bank in 1816, and the extension of the same mania for bank facilities that extended shortly af terwards to the West; let him look at the scenes of distress, failures, bankruptcies, which followed in 1819 and 1820; the stop laws, stay laws, replevin laws, and a host of legislative expedients to which the Legislatures ate ruin, while bank directors and stockholders were rioting in luxury and rolling in wealth, and the laboring classes driven to poor-houses, or sentenced to penitentiaries; the similar scenes that were acted over again in 1826, and again in 1833-34, when the United States Bank sought to obtain a continuance of its lordly power through the ruins of the people, and curtailed its discounts at the rate of $2,000,000 per month for that purpose; then say if the representation is much overdrawn. treated to dinners, presented with the richest offerings that can be bestowed upon him, and he is looked up to with as much reverence as the feudal lords were formerly by their enslaved vassals. A feverish excitement seizes upon the whole community; a spirit of speculation is engendered; and many look upon the industrious pursuit of any mechanical business as too dull and slow to occupy their time and attention. It is time now, however, to trace the action of the stockholders who have purchased up the products. In the course of a short time after they are through with their purchases, the products must be in demand, there being none to be bought; and, as the volume of circulating medium has increased from ten to thirty thousand dollars, by the infusion of twenty thousand dollars of the issues of the bank, and no increase of the quantity of value, as certainly as water will flow down hill, or as any cause will produce its plainest and most obvious effect, (the money having depreciated in real value, though nominally the same,) property must appreciate or rise in price, compared with that money. At this stage they sell, which they are enabled to do at two or three dollars, what they purchased at one dollar, until they have disposed of all on hand, having made a splendid profit by the operation; and whatever they have cleared in profit, the loss to the same amount is a tax upon the rest of the society. They are now ready to commence the operation of "contraction." The borrowers are called upon for a per centage, perhaps twenty-five per cent. at every sixty days; and, as the circulation is decreased at every payment, being withdrawn for the purpose of paying the bank, every instalment becomes the more difficult to obtain. If only one borrower were called upon, it would not make any material difference, as his payments would have but little effect upon the general mass of circulation; but as all are called upon at the same time, the volume of circulating medium is rapid-were driven to save the people from absolute and immedily decreasing, money becoming more scarce, and the means of obtaining it lessening. A great change takes place in the appearance and prospects of this little community; a general gloom has spread over the whole face of the country. Those who have borrowed direct all their energies in seeking for means to make payment; those who have kept their money during the season of apparent prosperity now hold it more closely, expecting to wring the most they can from their more improvident though perhaps not less worthy and industrious neighbors. Instead of being engaged in producing something by useful employment, many feel obliged to spend their time in seeking to relieve themselves from threatening distress. The president and officers of the bank appear now in a very different character than before, in the prosperous sea son. Instead of the great bestowers of smiles and favors, they are now looked upon as having the power to administer destruction, and they are cringed to for mercy. Some foreign war, or other distant calamity, is sagely assigned as the direful cause, in order to appease the minds of the people, and divert them from the inquiry into the real cause of this unsuspected course. In the general confusion and distress, reaching even those who had nothing to do in producing it, some are insolvent, and others realize out of their losses a handsome profit. Those who have thus transferred to them the products of the labors of others indulge in extravagance, luxury, and idleness; and those who have lost their property by its sacrifice probably seek relief from the sting of their misfortunes in the indulgence of other vices, and society thus loses the benefit of the industry of both classes. If the forty borrowers and the ten stockholders be thus withdrawn from useful industry and productive employment, one half of the society have the other half thrown upon their support, either as lords and noblemen, or as paupers and convicts. This shaving operation may require a year for its performance. At the end of that time, when the managers and fa The objections to the banking institutions of the United States arise chiefly from their being corporations without individual responsibility, and their being clothed with the power of making a paper money circulating medium-in other words, of controlling and regulating the currency. Corporations of any sort are opposed to the general liberties and equal rights of the citizens. They are protected, generally, by express prohibitions to individuals engaging in the same objects for which they are created. In England they are regarded as favorable to liberty, because their charters are so much power withdrawn from the sovereignty, which, according to the theory of that Government, is vested in the Crown. In this country, whose theory places the sovereign power in the people, they are unfavorable to liberty, for the same reason that they withdraw a portion of the sovereign power from the people. They are only liable in their corporate capacity, being subject to nothing but a corporate responsibility, which may very often be no responsibility at all. What is still worse, however, there is little or no moral responsibility, particularly where there is a powerful motive of interest involved. It is well known that men will do many things, when associated in a corporation, at which they would shudder even to think of as individuals; and no description of corporations has been so conspicuous for the manifestation of moral defections as banking companies. The whole history of corporations is full of examples, proving triumphantly the truth of this position. We select one, as given by Mr. Gouge, extract Banking Companies. ed from a report made to the Senate of the State of Massachusetts, in January, 1830, as follows: "The Sutton Bank was incorporated the 11th March, 1828. The act of incorporation provides 'that the capital stock of said corporation shall consist of one hundred thousand dollars in gold and silver, to be divided into shares of one hundred dollars each, which shall be paid in the manner following, viz: one half part thereof on or before the 1st day of October [then] next, and the remaining part thereof on or before the 1st day of March, in the year of our Lord one thousand eight hundred and twenty-nine.' And it further provides that no moneys shall be loaned or discounts made, nor shall any bills or promissory notes be made or issued from the said bank, until the capital subscribed and actually paid in, and existing in gold and silver in said vaults, shall amount to fifty thousand dollars; nor until the said capital stock actually in said vaults shall have been inspected and examined by three commissioners, to be appointed by the Governor for that purpose, whose duty it shall be, at the expense of the said corporation, to examine the money actually existing in said vaults; and to ascertain, by the oaths of the directors of the said bank, or a majority of them, that the said capital stock hath been bona fide paid in by the stockholders of said bank, and towards the payment of their respective shares, and not intended for any other purpose; and that it is intended there to remain as a part of said capital. · "On the 26th day of September, 1828, the Governor, in compliance with an application for that purpose, made by a committee of the subscribers for stock in said Sutton Bank, appointed commissioners to examine the moneys actually existing in the vaults of said bank, as is provided in the second section of their act of incorporation. On the 27th day of September, 1828, the Sutton Bank borrowed, on a deposite of fifty-one thousand dollars in the bills of the City Bank, the sum of fifty thousand dollars in specie for one day only. This same specie was examined by the commissioners, and the following certificates made out, viz: "We, the subscribers, commissioners appointed for that purpose, have this day been shown, and have examined, fifty thousand dollars in specie in the vaults of the Sutton Bank, which was paid in by the stockholders at their first instalment, agreeably to their act of incorporation, passed the 11th day of March, 1828. SEPTEMBER, 27, 1828.' "SUFFOLK, 88: JONATHAN LELAND. AMASA ROBERTS. SAMUEL WOOD. "BOSTON, September 27, 1828. Then personally appeared Hezekiah Howe, Jonas L. Sibby, Joshua W. Leland, and Thomas Harbach, being a majority of directors of Sutton Bank, and made oath that fifty thousand dollars in specie, by them shown in their vaults, was the first instalment paid by the stockholders of their bank towards the payment of their respective shares, and not for any other purpose, and that it is intended therein to remain a part of said capital. Before me, ELIPHALET WILLIAMS, J. P.' "The bills and specie were then re-exchanged, this whole business accomplished within an hour, and all of it done within the walls of the City Bank in the city of Boston." We have no doubt those were all men who claimed a fair standing in society, and any one of whom would have trembled to commit so shameful an act in their individual capacity, and without the shield of corporate investiture. What would produce a horrible compunction and terror on the mind of one man sits easy when it is divided among all the members of a corporation; but, becoming familiar to corruption in a corporate capacity, men may, and very probably do, [24th CoNG. 2d SESS. How many sin more easily in their individual character. instances have come within our knowledge of mobs, upon the failure of a bank, whose officers were the occupants of spacious houses, living in the height of splendor and luxury, while their creditors were beggared for the want of their honest dues, in which it was difficult to determine which to condemn most-the charter-protected villany of the one, or the misdirected violence of the other! Scenes of that kind have been very frequent, and furnish strong evidence of the corrupting and pernicious tendency of money corporations. Incorporated companies will set up claims of which most individuals would be ashamed, and often, through the influence they can bring to their aid, bear down the rights of an honest individual who cannot compete with them for power. They often set themselves boldly in array against the Government which gave them birth, and sometimes have gone so far as even to claim their privileges as vested rights, that the power which gave them could not take away. The only sort of justification for the creation of such institutions is the accomplishment of some great purpose of general utility, beyond the reach of individual means and enterprise. Lord Coke says, "the granting of exclusive privileges cannot be justified, except on a case being made out of urgens necessitas et evidens utilitas.” A corporation for the purpose of building a bridge, a turnpike, a railroad, or a canal, which may produce a work highly beneficial to the public, may be regarded of that description; and it is only on the principle of necessity, being beyond the power of individual enterprise, and not furnishing sufficient interest for the investment of private capital, and the benefits they confer on the community at large, that they can be justified. But what justification can be found for the incorporation of banking companies in necessity arising from the object being beyond the accomplishment of individual means? What is more simple and easy than the loaning of money? Ten men, each owning $1,000, can as easily loan it as ten men united in a corporation owning $10,000 can loan that sum. the loan of money there is no great undivided purpose to be accomplished, as in the construction of a bridge or a canal; nor is there the production of any thing by labor. It is a single, plain, simple operation, which can be extended by every single capitalist just to the amount of money he has to spare; and neither necessity nor public policy requires the incorporation of a company for the purpose. of any In Banking incorporations, therefore, not effecting any great public purpose, which may not be accomplished by individual energy, are inimical to the principles of republican government; but, further, as manufacturers of paper money, authorized to denominate as worth so much, and representing so much value, that which intrinsically is worth nothing, they invade one of the high and most important prerogatives of sovereignty, which, as we have already seen, cannot be exercised, even by the supreme power its citizens, and perpetrating great injustice. If the GovGovernment, without inflicting a deep injury upon ernment itself, administered by those who are immediately responsible to the people, whose interests are identified with the people, cannot exert the power of increasing and decreasing the quantity of the circulating medium, thus depreciating its value, without inflicting mischief upon the community, how incomparably more mischievous and destructive to the principles of justice and equality of rights! what madness! to surrender this power into the hands of corporations, whose interests are directly at war with those of the rest of the citizens! It is the advantage of stockholders in those institutions to obtain twice, thrice, or quadruple interest on their capital, whether real or fictitious. Is it not opposed to the interest of the community to pay it? Are not their interests then set in direct conflict? An individual who owns money can only obtain interest, generally six per cent., on what he actually has. Banks, however, are enabled to obtain usurious interest on their actual capital, whether it consists of specie, the notes of other banks-two or three dollars of which are really worth but one in specie-or the stock notes of subscribers, which are worth nothing at all. A bank with a capital of $100,000 is authorized to issue its notes to twice the amount of its capital. It issues its notes to the amount of $200,000, and receives interest, or rather discount, on that sum. Its capital and credit, or faith, that it can redeem and pay two dollars with one, are thus combined together in a tangible form in the shape of bank notes, and it receives at the rate of 6 4-10 per cent. on the whole. Now, what is the difference between receiving $12 80 per hundred, or calling one hundred dollars two-one capital, the other faith-and receiving $6 40 on each? The usury on the part of the bank is the same in both cases. It is true there is this difference in the operation: in paying double interest on the real sum, the borrower pays the whole of it; in the other case, calling it $200, although it really represents but one, it falls upon the whole community, and operates as a tax upon all; and is, therefore, not only usurious but unjust, affecting those who have no participation in the transaction. The banks take the promissory notes of individuals at $6 40 per hundred per annum interest, paid in advance, and give their own promissory notes in exchange, each hundred of which only represents fifty dollars of their own capital, the other fifty being credit, without interest; in effect receiving interest on the debts which they owe. Mr. Jefferson, in a letter to John N. Eppes, in 1813, says: "At the time we were funding our national debt, we heard much about a 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 age entered bona 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.' 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." * The tax levied upon the people for the support of banks, by their privilege of taking bank interest on twice or three times the amount of capital they have, is very clearly and handsomely exemplified by Mr. Gouge, in his valuable Treatise on the American Banking System, at page 24, pamphlet edition. He says, "the thirty-one chartered banks of Pennsylvania had, in 1829, according to the statement of Mr. Gallatin, a nominal capital of $12,032,000. $1,310,000 of this amount were invested in real estate, and $4,620,000 in stocks of various descriptions, leaving the banks $6,102,000 to employ in discounting notes. From the $5,930,000 invested in stocks and real estate, it is to be presumed they derive as much advantage as private persons derive from similar investments. With the remaining $6,102,000 they discount notes to the amount of $17,526,000. On this amount they draw interest at 6 4-10 per cent.; for the usage of the banks is to charge sixty-four days' interest for sixty-three days, and to take the interest in advance. "The revenue which private capitalists would derive from lending $6,102,000, at the legal rate of 6 per cent., would be $366,120 per annum. The revenue which the banks derive from the management of this amount is $1,121,664. If the banks cannot, by the use of a nominal capital of $6,102,000, draw interest from the people on the sum of $17,526,000, their returns to the Legisla ture are deceptive. If they actually draw interest on this amount, they draw from the people $755,544 per annum more than would be drawn by private persons lending bona fide capital of the same amount as the nominal capital of the banks. 66 Supposing the sums paid in each year, since the passage of the bank act in 1814, to equal that paid in 1829, the total amount paid by the people in sixteen years, over and above 6 per cent. on the loanable capital of the banks, is $12,088,704. A direct tax of half the amount for the support of Government would have produced a rebellion." "The Bank of the United States had on the 1st of November, 1829, a nominal capital of $34,996,270. Of this amount, $11,717,071 were invested in public stocks, and $3,876,404 in real estate, leaving it $19,402,795 of nominal capital for its proper business of accommodating borrowers and dealers in bills of exchange. On this amount of bona fide capital, lent at six per cent., private persons would draw a revenue of $1,164,167. But the bank, with this amount of nominal capital, discounts notes and bills of exchange to the amount of $40,017,445, from which it derives an annual revenue of $2,561,114, or $1,396,947 more per annum than would be received by private capitalists;" nearly $40,000,000 in thirty years. They may well afford to pay a bonus of two, three, or four millions, for the privilege of taxing the people nearly forty millions. In this estimate Mr. Gouge does not include "what is paid to the bank on the rate of exchange," though he supposes this must amount to hundreds of thousands. But this is far from being all the tax drawn from the people by the banks. It has already been shown that, by infusing their nominal paper money into the mass of circulation, they depreciate the value of the whole mass, just in proportion to the amount of paper issued, compared with the specie. Though the delusion which is ingeniously kept up of its "convertibility" into specie, (convertible, truly, if not more than one third be demanded,) and being called by the same name, it is palmed off as the representative of specie, although, in reality, three dollars only truly represent one; the whole volume, including the specie, is depreciated, and the prices of all commodities raised. Foreign products and manufactured articles flow into the country, and are sold at the high artificial prices, which must be paid for in specie. There is then a double operation: the specie is driven out of the country to pay for foreign products and manufactures; foreign producers and manufacturers come in competition with those of our own country; and, to counteract the effect of this, the manufacturers here claim a protection from foreign manufacturers by the imposition of duties on foreign imports. These duties are paid by the consumers here; that is, the people pay one tax for the benefit of manufacturers, for the privilege of paying another tax to the banks. Both taxes would be avoided, if the currency of the country were not depreciated by the infusion of bank paper. We have the authority of Adam Smith, (who has been often quoted as favorable to banks, as he was, but not to the extent for which he is generally claimed as an advocate, ) that bank paper drives the precious metals from the country. He says, in book 2, chapter 2, "Let us suppose, for example, that the whole circulating medium of some particular country amounted, at a particular time, to one million sterling, that sum being then sufficient for circulating the whole annual produce of their land and labor. Let us suppose, too, that, some time thereafter, different banks, or bankers, issue promissory notes, payable to the bearer, to the extent of one million, reserving in their different coffers two hundred thousand pounds to answer occasional demands. There would remain, therefore, in circulation, eight hundred thousand pounds in gold and silver, and a million of bank notes, or eighteen hundred thousand Banking Companies. pounds of paper and money together. But the annual produce of the land and labor of the country had before required one million to circulate and distribute it to its proper consumers, and that annual produce cannot be immediately augmented by those operations of banking. One million, therefore, will be sufficient to circulate it after them. The goods to be bought and sold being precisely the same as before, the same quantity of money will be sufficient for buying and selling them. The channel of circulation, if I may be allowed such an expression, will remain precisely the same as before. One million we have supposed sufficient to fill that channel. Whatever, therefore, is poured into it beyond this sum, cannot run in it, but must overflow. One million eight hundred thousand pounds are poured into it. Eight hundred thousand pounds, therefore, must overflow; that sum being over and above what can be employed in the circulation of the country. But although this sum cannot be employed at home, it is too valuable to be allowed to lie idle. It will therefore be sent abroad, in order to seek that profitable employment which it cannot find at home. But the paper cannot go abroad, because at a distance from the banks which issue it, and from the country in which payment of it can be exacted by law, it will not be received in common payments. Gold and silver, therefore, to the amount of eight hundred thousand pounds, will be sent abroad, and the channel of home circulation will remain filled with a million of paper, instead of the million of those metals which filled it before." That the issues of bank paper produce the necessity, or the supposed necessity, for imposing duties upon foreign imports, by raising the nominal prices, and turning the balance of trade against us, is equally susceptible of demonstration. Among the numerous evil tendencies of bank issues, that of promoting extravagant gambling speculations is not the least. Mr. Raymond, in his Elements of Political Economy, vol. 2, page 146, says, with much truth: "None of the great and substantial departments of industry can be prosecuted with money borrowed at bank interest." Again, at page 147: "Speculation is the only business that can be followed with money loaned of banks; and hence we always find that speculation is most rife when banks are most abundant, and when they deal out their notes the most profusely." Again, speaking of bank loans, and speaking of a borrower at bank, he says: "He must employ it in some adventurous speculation, which, if successful, will enable him to pay the interest and leave him a profit; but which, if unsuccessful, may bring him to ruin. Hence, wherever banks have been established in the interior of the country, and the farmers and planters have become the principal customers of the bank, they have generally been ruined. This ever has and ever will be the case, so long as the rate of rent is lower than the rate of interest; and rent in all countries is always two or three per cent. lower than interest." When prices rise, which, as we have already attempted to show, is inevitable on the increase of the quantity of money, without an increase at the same time of value, a spirit, a fever for speculation, is created. Men become dissatisfied with the gains arising from regular and steady habits of industry, and indulge in dreams of splendid fortunes to be amassed in an easier way, by drawing from the industry of others, in speculation. Simon Snyder, Governor of the State of Pennsylvania, in his message of March, 1813, returning to the Senate of that State a bill, with his objections, very justly observes: "The establishment of twenty five new banks, dispersed all over the State, with a capital of $9,525,000, would, by the readiness to give credit, invite to visionary speculations, divert men from useful pursuits, damp the ardor of industrious enterprise, and consequently demoralize the community." In his message the next year, accompanied with his objections to another bill of the same nature, which he VOL. XIII.-U [24th CoNG. 2d SESS. returned to the Senate, he says: "I cannot divest myself of the fear that, if it should become a law, it would tend only to enrich the wealthy and the speculator, while it would, in various forms, heap burdens on the poor and industrious." In the same message he says: "On the ground of principle, generally, I may confidently say that industry is the only permanent source of wealth. It secures subsistence, and advances our interests by slow yet sure and regular gains, and is the best preservative of morals. Not so speculation, (which this bill seems to invite;) it has the direct contrary effect: depending on no fixed principles, it opens a field for the exercise of ingenuity, ever on the alert to take advantage of the unwary in accidental variations of the times. The success of the speculator by profession tempts the farmer or mechanic to forsake his accustomed honest pursuits. Launched on the wild sea of speculation, ever exposed to deviations from rectitude, his moral principles become weakened, and eventually all sense of commutative justice is destroyed." The last bill passed by two thirds of both Houses, and became a law against the veto of the Governor; and it was found that it led to all the extravagant speculations and pernicious consequences which he had predicted. It was in view, no doubt, of their tendency to luxury, extravagance and inequalities, that Mr. Jefferson, in his letter to the publisher of Destutt Tracy's Treatise on Political Economy, returning the translation to him, and speaking of the merits of the work, says: By diffusing sound principles of political economy, it will protect the public industry from the parasite institutions now consuming it, and lead us to that just and regular distribution of the public burdens from which we have sometimes strayed." 66 The wealth of a country consists in its industry and means of promoting and stimulating individual enterprise. Speculators produce nothing; they are the drones of the bec-hive, which live and fatten upon the labor of others. Every citizen, therefore, who is invited by artificial laws to withdraw from the walks of industry, is one member lost to the great wealth and happiness producing family, and imposes an additional burden upon those who remain, besides lessening their motive to active industry. When a large portion of society are induced into speculation instead of working, their aid is not only lost in the support of the Government, so as to increase the burden upon others by that loss, but the rest of the community are obliged to support them, and make fortunes for them besides. They are thus a charge upon community, instead of contributing their proportion to sustain the burden. One of the most extensive evils arising from the banking system is the fluctuation in all branches of business consequent upon the expansions and contractions of bank issues. The manufacture of paper money being regulated entirely by those whose sole object is their own interest, and who are under no political responsibility, and, as we have seen, very little, if any, moral control, is liable to enlarge or contract, just as that interest, opposed to the general interest, may dictate. The banking institutions of this country are peculiarly unfortunate to the public in their power to produce fluctuations from their expansions and contractions of issues. They have no individual responsibility. A bank here may be incorporated of the most wealthy citizens as stockholders, and yet there is nothing liable but their stock, which is often a very doubtful security. In this respect they differ from the banks in Scotland, the stockholders of which are under an unlimited responsibility; that is, each stockholder is liable in his whole estate for the redemption of their paper, just as the several members of a partnership firm. The stockholders, under such responsibility, will, of course, be cautious not to permit a greater amount of paper to be issued than can certainly be redeemed without risk of their private fortunes. This is a great security, and operates as a powerful check-a check act ing upon motives of private interest against excessive is sues. From what has preceded, it will be seen that the object of your committee has been to prove that the banking system in this country is subject to many and grave objections, arising mainly from the banking institutions being incorporated bodies, with exclusive privileges, and under a limited responsibility-little better than none; and their being authorized to issue bank paper to supply even the small circulation, to the amount of twice, thrice, or quadruple, their specie capital; thus invading the high sovereign power of regulating the measure of value, which is only safely intrusted to the Government, administered by those who are responsible to the people. Who would be willing to intrust in the hands of an irresponsible corporation the power of adulterating the coin with alloy, as might best suit their interests, and withdrawing that alloy in the same way? And what difference is there between adulterating the coin at their pleasure, and decreasing and enhancing the value of the mass of circulation, by withdrawing and issuing bank notes as they please? What farmer would not be startled at a proposition to intrust corporations with the power of regulating the weights and measures of commodities in which he dealt, so as to measure his wheat with a large bushel measure when they wished to buy, and a small one when they wished to sell; to measure his butter with a large pound weight when they wished to purchase, and a small one when they wished to dispose of the same article? And what difference is there between controlling the measure of value and that of weight or measure? would be willing that the power of levying taxes for the support of Government should be delegated to corporations, whose proceedings were only known to a few who managed them? And yet we submit to their power of imposing taxes much heavier, to support themselves, and grow rich at the expense of the people. The regulating and controlling the currency is as necessarily an act of the Government as any other act of sovereignty, and should be exercised by the same authority. The banks in this country are permitted to manufacture paper for the small circulation. There are none of the States which limit the banks in their issues to a larger minimum than $5, and many of them authorize those of as low a denomination as $1. In some of the States, then, the banks are permitted to furnish the entire circulation above the denomination of $1, which is nearly the same, in effect, as supplying the entire circulation. Supplying of the small circulation has a most powerful influence upon the business of the mass of community. If our banking institutions were limited, in all the States, to the issues of notes of $100, or $50, or even $20, we should soon see a great change in the health of the currency. A large portion of the dealings of our society is below either of those sums; and, although we should have bank notes above them, specie would of course flow in to supply the place of the small notes below. It is believed that half the dealings of the community are below $50. The Bank of England, although incorporated in 1694, had never issued any notes of less denomination than £20 (nearly $100) until 1759; and its whole issues up until 1780, at any one time, were no more than six or seven millions of pounds. Until after that time, no great fluctuations or consequent bankruptcies were experienced. Soon afterwards, when it began the issues of £1 notes, and extended its issues, embarrassment and fluctuations took place. The first which we have seen noticed by political writers is that in 1783; then followed by that of 1793, 1797, 1816, 1819, and 1825; all which have become celebrated in the history of the politics of that country; and, in every instance, as proved by Tooke, Mushet, Parnell, and others, it was preceded first by an extravagant expansion, and next by a contraction of the issues of the bank. In 1797, the Bank of England suspended specie payments, and so continued to refuse the redemption of its notes with specie until 1822, when it resumed them under Mr. Tooke, in his Treatise on Currency, page 125, justan act of Parliament of 1819. In 1829, it ceased to issue ly remarks: "Next to the administration of the State, there notes of a less denomination than £5, (about $24,) and is no administration of any officer so immediately and exhas so continued since. In this respect, the Bank of Eng-tensively affecting the interests of the community as that land is not so objectionable as our banking institutions, and its issues are not so subject to fluctuations as ours, nor so injurious to small dealers, constituting the great mass of society. It is worthy of remark too, that, owing to the state of society there, $24 is a much larger sum, compared with other commodities and labor, than here. The Bank of England is the only banking institution within sixtyfive miles of London. Beyond that distance from London, there are a great number of joint stock companies, which issue notes and are controlled by the Bank of England. Your committee had intended, under this branch of inquiry, to present in some detail a history of banking in the several States, with a view of showing that, in proportion to the extent of the issues of bank paper beyond their specie capital was the rise in prices; that this was necessarily followed by a contraction of issues, and in that proportion was the fall of the prices of all other commodities. We are not without abundant historical facts on this subject, to be derived from our periodicals and public journals. The history of our political economy will show, very conclusively, that every instance of great rise in prices followed excessive bank issues and speculation, and over-trading the consequence; that in proportion to the suddenness and rapidity of the rise from the expansions of bank issues was the consequent contraction of discounts and the fall of priBut they feared that their remarks had already extended in length beyond any interest they could give to the subject, and therefore have omitted it, believing it to be more important to present principles in a brief form than to burden their report with details of facts and figures, which might weary rather than elicit any interest. ces. Who which is intrusted to the persons [the bank directors] who are invested with the privilege of issuing paper money; and who, by the manner in which they exercise that privilege, have it in their power to produce great changes in the property and condition of every individual in the kingdom. No man, or set of men, ought, in my opinion, to be intrusted with that privilege." It was in view, no doubt, of the exercise of this high prerogative of sovereign power by the banks here, that Mr. Jefferson, and other enlightened patriots, spoke in such strong terms against the system, as being an aristocracy of a dangerous tendency and character. Mr. Jefferson, in a letter to John N. Eppes, (4th vol. Mem. 201,) says: "Private fortunes, in the present state of our circulation, are at the mercy of those self-created money-lenders, and are prostrated by the floods of nominal money with which their avarice deluges us." Again, on another occasion, he says: "The bank mania is one of the most threatening of these imitations [of England;] it is raising up a moneyed aristocracy in our country, which has already set the Government at defiance; and although forced to yield a little on the first essay of their strength, their principles are unyielded and unyielding. They have taken deep root in that class from which our legislators are drawn; and the sop of Cerberus, from fable, has become history. Their principles take hold of the good, their pelf of the bad; and thus those whom the constitution has placed as guards to its portals are sophisticated or suborned from their duties. That paper money has some advantages must be admitted, but its abuses are also inveterate; and that it, by breaking up the measure of value, makes a lottery of all private property, cannot be denied." |