-no divorce-without collecting the public dues in the legal and constitutional currency of the country. Without that, all would prove a perfect delusion; as this bill would prove should it pass. We had no constitutional right to treat the notes of mere private corporations as cash; and if we did, nothing would be done. slender majority was sent to the House of Representatives; where it was lost by a majority of 14. This was a close vote in a house of 236 present; and the bill was only lost by several friends of the administration voting with the entire opposition. But a great point was gained. Full discussion had been had upon the subject, and the public mind was waked up to it. CHAPTER XXX. EMPTION SYSTEM: TAXATION WHEN SOLD. "These views, and many others similar, he had openly expressed, in which the great body of the gentlemen around him had concurred. We stand openly pledged to them before the country and the world. We had fought the battle manfully and successfully. The cause was good, and having stood the first shock, nothing was necessary, but firmness; standing fast on our position to ensure victory-a great and glorious victory in a noble cause, which was calculated to effect a more important re- PUBLIC LANDS: GRADUATION OF PRICE: PREformation in the condition of society than any in our time-he, for one, could not agree to terminate all those mighty efforts, at this and the extra session, by returning to a complete and perfect reunion with the banks in the worst and most dangerous form. He would not belie all that he had said and done, by voting for the bill as it now stood amended; and to terminate that which was so gloriously begun, in so miserable a farce. He could not but feel deeply disappointed in what he had reason to apprehend would be the result-to have all our efforts and labor thrown away, and the hopes of the country disappointed. All would be lost! No; he expressed himself too strongly. Be the vote what it may, the discussion would stand. Light had gone abroad. The public mind had been aroused, for the first time, and directed to this great subject. The intelligence of the country is every where busy in exploring its depths and intricacies, and would not cease to investigate till all its labyrinths were traced. The seed that has been sown will sprout and grow to maturity; the revolution that has been begun will go through, be our course what it may." The vote was then taken on the passage of the bill, and it was carried-by the lean majority of two votes, which was only the difference of one voter. The affirmative vote was: Messrs. Allen, Benton, Brown, Clay of Alabama, Cuthbert, Fulton, Hubbard, King, Linn, Lumpkin, Lyon, Morris, Mouton, Niles, Norvell, Pierce, Roane, Robinson, Sevier, Smith of Connecticut, Strange, Trotter, Walker, Wall, Williams, Wright, Young-27. The negatives were: Messrs. Bayard, Buchanan, Calhoun, Clay of Kentucky, Clayton, Crittenden, Davies, Grundy, Knight, McKean, Merrick, Nicholas, Prentiss, Preston, Rives, Robbins, Ruggles, Smith of Indiana, Southard, Spence, Swift, Talmadge, Tipton, Webster, Hugh L. White-25. FOR all the new States composed territory belonging, or chiefly so to the federal government, the Congress of the United States became the local legislature, that is to say, in the place of a local legislature in all the legislation that relates to the primary disposition of the soil. In the old States this legislation belonged to the State legislatures, and might have belonged to the new States in virtue of their State sovereignty except by the "compacts" with the federal government at the time of their admission into the Union, in which they bound themselves, in consideration of land and money grants deemed equivalent to the value of the surrendered rights, not to interfere with the primary disposition of the public lands, nor to tax them while remaining unsold, nor for five years thereafter. These grants, though accepted as equivalents in the infancy of the States, were soon found to be very far from it, even in a mere moneyed point of view, independent of the evils resulting from the administration of domestic local questions by a distant national legislature. The taxes alone for a few years on the public lands would have been equivalent to all the benefits derived from the grants in the compacts. Composed of citizens from the old States where a local legislature administered the public lands according to the local interests selling lands of different qualities for different prices, according to its quality-granting preemptions and donations to first settlers-and subjecting all to taxation as soon as it became public property; it was a national feeling to desire the same advantages; and for this purThe act having passed the Senate by this pose, incessant, and usually vain efforts were made to obtain them from Congress. At this session (1837-'38) a better progress was made, and bills passed for all the purposes through the Senate. 1. The graduation bill. This measure had been proposed for twelve years, and the full system embraced a plan for the speedy and final extinction of the federal title to all the lands within the new States. Periodical reductions of price at the rate of 25 cents per acre until reduced to 25 cents: a preference in the purchase to actual settlers, constituting a preemption right: donations to destitute settlers: and the cession of the refuse to States in which they lay-these were the provisions which constituted the system and which were all contained in the first bills. But finding it impossible to carry all the provisions of the system in any one bill, it became necessary to secure what could be obtained. The graduation-bill was reduced to one feature-reduction of price; and that limited to two reductions, bringing down the price at the first reduction to one dollar per acre: at the next 75 cents per acre. In support of this bill Mr. Benton made a brief speech, from which the following are some passages: "The bill comes to us now under more favorable auspices than it has ever done before. The President recommends it, and the Treasury needs the money which it will produce. A gentleman of the opposition [Mr. CLAY], reproaches the President for inconsistency in making this recommendation; he says that he voted against it as senator heretofore, and recommends it as President now. But the gentleman forgets so tell us that Mr. Van Buren, when a member of the Senate, spoke in favor of the general object of the bill from the first day it was presented, and that he voted in favor of one degree of reduction-a reduction of the price of the public lands to one dollar per acre -the last session that he served here. Far from being inconsistent, the President, in this recommendation, has only carried out to their legitimate conclusions the principles which he formerly expressed, and the vote which he formerly gave. "The bill, as modified on the motions of the senators from Tennessee and New Hampshire [Messrs. GRUNDY and HUBBARD] stands shorn of half its original provisions. Originally it embraced four degrees of reduction, it now contains but two of those degrees. The two lastthe fifty cent, and the twenty-five cent reductions, have been cut off. I made no objection to the motions of those gentlemen. I knew them to be made in a friendly spirit; I knew also that the success of their motions was necessary to the success of any part of the bill. Certainly I would have preferred the whole-would have preferred the four degrees of reduction. But this is a case in which the homely maxim applies, that half a loaf is better than no bread. By giving up half the bill, we may gain the other half; and sure I am that our constituents will vastly prefer half to nothing. The lands may now be reduced to one dollar for those which have been five years in market, and to seventyfive cents for those which have been ten years in market. The rest of the bill is relinquished for the present, not abandoned for ever. The remaining degrees of reduction will be brought forward hereafter, and with a better prospect of success, after the lands have been picked and culled over under the prices of the present bill. Even if the clauses had remained which have been struck out, on the motions of the gentlemen from Tennessee and New Hampshire, it would have been two years from December next, before any purchases could have been made under them. They were not to take effect until December, 1840. Before that time Congress will twice sit again; and if the present bill passes, and is found to work well, the enactment of the present rejected clauses will be a matter of course. "This is a measure emphatically for the benefit of the agricultural interest-that great interest, which he declared to be the foundation of all national prosperity, and the backbone, and substratum of every other interest-which was, in the body politic, front rank for service, and rear rank for reward—which bore nearly all the burthens of government while carrying the government on its back-which was the fountain of good production, while it was the pack-horse of burthens, and the broad shoulders which received nearly all losses-especially from broken banks. This bill was for them; and, in voting for it, he had but one regret, and that was, that it did not go far enough—that it was not equal to their merits." The bill passed by a good majority-27 to 16; but failed to be acted upon in the House of Representatives, though favorably reported upon by its committee on the public lands. 2. The pre-emptive system. The provisions of the bill were simple, being merely to secure the privilege of first purchase to the settler on any lands to which the Indian title had been extinguished; to be paid for at the minimum price of the public lands at the time. A senator from Maryland, Mr. Merrick, moved to amend the bill by confining its benefits to citizens of the United States-excluding unnaturalized foreigners. Mr. Benton opposed this motion, in a brief speech. "He was entirely opposed to the amendment of the senator from Maryland (Mr. MERRICK). It proposed something new in our legislation. It proposed to make a distinction between aliens and citizens in the acquisition of property. Pre-emption rights had been granted since the formation of the government; and no distinction, until now, had been proposed, between the persons, or classes of persons, to whom they were granted. No law had yet excluded aliens from the acquisition of a pre-emption right, and he was entirely opposed to commencing a system of legislation which was to affect the property rights of the aliens who came to our country to make it their home. Political rights rested on a different basis. They involved the management of the government, and it was right that foreigners should undergo the process of naturalization before they acquired the right of sharing in the government. But the acquisition of property was another affair. It was a private and personal affair. It involved no question but that of the subsistence, the support, and the comfortable living of the alien and his family. Mr. B. would be against the principle of the proposed amendment in any case, but he was particularly opposed to this case. Who were the aliens whom it proposed to affect? Not those who are described as paupers and criminals, infesting the purlieus of the cities, but those who had gone to the remote new States, and to the remote parts of those States, and into the depths of the wilderness, and there commenced the cultivation of the earth. These were the description of aliens to be affected; and if the amendment was adopted, they would be excluded from a pre-emption right in the soil they were cultivating, and made to wait until they were naturalized. The senator from Maryland (Mr. MERRICK), treats this as a case of bounty. He treats the pre-emption right as a bounty from the government, and says that aliens have no right to this bounty. But, is this correct? Is the pre-emption a bounty? Far from it. In point of money, the pre-emptioner pays about as much as any other purchaser. He pays the government price, one dollar and twenty-five cents; and the table of land sales proves that nobody pays any more, or so little more that it is nothing in a national point of view. One dollar twenty-seven and a half cents per acre is the average of all the sales for fifteen years. The twenty millions of acres sold to speculators in the year 1836, all went at one dollar and twenty-five cents per acre. The pre-emption then is not a bounty, but a sale, and a sale for full price, and, what is more, for solid money; for pre-emptioners pay with gold and silver, and not with bank credits. Numerous were the emigrants from Germany, France, Ireland, and other countries, now in the West, and especially in Missouri, and he (Mr. B.) had no idea of imposing any legal disability upon them in the acquisition of property. He wished them all well. If any of them had settled upon the public lands, so much the better. It was an evidence of their intention to become citizens, and their labor upon the soil would add to its product and to the national wealth." The motion of Mr. Merrick was rejected by a majority of 13. The yeas were: Messrs. Bayard, Clay of Kentucky, Clayton, Crittenden, Davis, Knight, Merrick, Prentiss, Preston, Rives, Robbins, Smith, of Indiana, Southard, Spence, Tallmadge, Tepton, 15. The nays were: Messrs. Allen, Benton, Brown, Buchanan, Calhoun, Clay, of Alabama, Cuthbert, Fulton, Grundy, Hubbard, King, Linn, Lumpkin, Lyon, Mauton, Nicholas, Niles, Nowell, Pierce, Roane, Robinson, Sevier, Walker, Webster, White, Williams, Wright, Young, of Illinois, (28.) The bill being then put to the vote, was passed by a majority of 14. 3. Taxation of public lands when sold. When the United States first instituted their land system, the sales were upon credit, at a minimum price of two dollars, payable in four equal annual payments, with a liability to revert if there should be any failure in the payments. During that time it was considered as public great vice of the banking system in the United States is in banking upon paper-upon the paper of each other—and treating this paper as cash. This may be safe among the banks themselves; it may enable them to settle with one another, and to liquidate reciprocal balances; but to the public it is nothing. In the event of a run upon a bank, or a general run upon all banks, it is specie, and not paper, that is wanted. land, nor was the title passed until the patent supplied by the notes of other banks. The issued-which might be a year longer. Five years, therefore, was the period fixed, during which the land so sold should be exempt from taxation by the State in which it lay. This continued to be the mode of sale, until the year 1821, when the credit was changed for the cash system, and the minimum price reduced to one dollar twenty-five cents per acre. The reason for the five years exemption from state taxation had then ceased, but the compacts remaining It is specie, and not paper, which the public unaltered, the exemption continued. Repeated want, and must have. applications were made to Congress to consent to the modification of the compacts in that article; but always in vain. At this session the application was renewed on the part of the new States; and with success in the Senate, where the bill for that purpose passed nearly unanimously, the negatives being but four, to wit: Messrs. Brown, Clay, of Kentucky, Clayton, Southard. Being sent to the H. R. it remained there without action till the end of the session. CHAPTER XXXI. SPECIE BASIS FOR BANKS: ONE THIRD OF THE PROPORTION: SPEECH OF MR. BENTON ON THE THIS is a point of great moment-one on which the public mind has not been sufficiently awakened in this country, though well understood and duly valued in England. The charters of banks in the United States are usually drawn on this principle, that a certain proportion of the capital, and sometimes the whole of it, shall be paid up in gold or silver before the charter shall take effect. This is the usual provision, without any obligation on the bank to retain any part of this specie after it gets into operation; and this provision has too often proved to be illusory and deceptive. In many cases, the banks have borrowed the requisite amount for a day, and then returned it; in many other cases, the proportion of specie, though paid up in good faith, is immediately lent out, or parted with. The result to the public is about the same in both cases; the bank has little or no specie, and its place is The motion of the senator from Pennsylvania [Mr. BUCHANAN] is intended to remedy this vice in these District banks; it is intended to impose an obligation on these banks to keep in their vaults a quantum of specie bearing a certain proportion to the amount of their immediate liabilities in circulation and deposits. The gentleman's motion is well intended, but it is defective in two particulars: first, in requiring the proportion to be the one-fourth, instead of the one-third, and next, in making it apply to the private deposits only. The true proportion is one-third, and this to apply to all the circulation and deposits, except those which are special. This proportion has been fixed for a hundred years at the Bank of England; and just so often as that bank has fallen below this proportion, mischief has occurred. This is the sworn opinion of the present Governor of the Bank of England, and of the directors of that institution. Before Lord Althorpe's committee in 1832, Mr. Horsley Palmer, the Governor of the Bank, testified in these words: "The average proportion, as already observed, of coin and bullion which the bank rate of a third of the total amount of all her thinks it prudent to keep on hand, is at the liabilities, including deposits as well as issues.' Mr. George Ward Norman, a director of the bank, states the same thing in a different form of words. He says: 'For a full state of the circulation and the deposits, say twenty-one millions of notes and six millions of deposits, making in the whole twenty-seven millions of liabilities, the proper sum in coin and bullion for the bank to retain is nine millions.' Thus, specie on hand and the circulation and deposits, the average proportion of one-third between the must be considered as an established principle at that bank, which is quite the largest, and amongst the oldest-probably, the very oldest bank of circulation in the world." The Bank of England is not merely required to keep on hand, in bullion, the one-third of its immediate liabilities; it is bound also to let the country see that it has, or has not, that proportion on hand. By an act of the third year of William IV., it is required to make quarterly publications of the average of the weekly liabilities of the bank, that the public may see whenever it descends below the point of safety. Here is the last of these publications, which is a full exemplification of the rule and the policy which now governs that bank: Quarterly average of the weekly liabilities and assets of the Bank of England, from the 12th December, 1837, to the 6th of March, 1838, both inclusive, published pursuant to the act 3 and William IV., cap. 98: Liabilities. Assets. Circulation, £18,600,000 Securities, £22,792,900 £30,135,000 London, March 12. £30,807,000 According to this statement, the Bank of England is now safe; and, accordingly, we see that she is acting upon the principle of having bullion enough, for she is shipping gold to the United States. banks in England, and a suspension of specie payments for six-and-twenty years! It was departed from again about a year ago, when the proportion sunk to one-eighth nearly; and what was the result? A death struggle between the paper systems of England and the United States, in which our system was sacrificed to save hers. Her system was saved from explosion! but at what cost?—at what cost to us, and to herself? to us a general stoppage of all the banks for twelve months; to the English, a general stagnation of business, decline of manufactures, and of commerce, much individual distress, and a loss of two millions sterling of revenue to the Crown. The proportion of one-third may then be assumed as the point of safety in the Bank of England; less than that proportion cannot 10,015,000 be safe in the United States. Yet the senator from Pennsylvania proposes less-he proposes the one-fourth; and proposes it, not because he feels it to be the right proportion, but from some feeling of indulgence or forbearance to this poor District. Now, I think that this is a case in which kind feelings can have no place, and that the point in question is one upon which there can be no compromise. A bank is a bank, whether made in a district or a State; and a bank ought to be safe, whether the stockholders be rich or poor. Safety is the point aimed at, and nothing unsafe should be tolerated. There should be no giving and taking below the point of safety. Experienced men fix upon the onethird as the safe proportion; we should not, therefore, take a less proportion. Would the gentleman ask to let the water in the boiler of a steamboat sink one inch lower, when the experienced captain informed him that it had already sunk as low as it was safe to go? Certainly not. So of these banks. One-third is the point of safety; let us not tamper with danger by descending to the one-fourth. The proportion in England is one-third. The bank relies upon its debts and other resources for the other two-thirds, in the event of a run upon it. This is the rule in that bank which has more resources than any other bank in the world; which is situated in the moneyed metropolis of the world—the richest merchants its debtors, friends and customers-and the Government of England its debtor and backer, and always ready to sustain it with exchequer bills, and with every exertion of its credit and means. Such a bank, so situated and so aided, still deems it necessary to its safety to keep in hand always the one-third in bullion of the amount of its immediate liabilities. Now, if the proportion of one-third is necessary to the safety of such a bank, with such resources, how is it possible for our banks, with their meagre resources and small array of friends, to be safe with a less proportion? This is the rule at the Bank of England, and just as often as it has been departed from, the danger of that departure has been proved. It was departed from in 1797, when the proportion sunk to the one-seventh; and what was the result? The stoppage of the banks, and of all the VOL. II.-9 When a bank stops payment, the first thing we see is an exposition of its means, and a declaration of ultimate ability to pay all its debts. This is nothing to the holders of its notes. Immediate ability is the only ability that is of any avail to them. The fright of some, and the necessity of others, compel them to part with their notes. Cool, sagacious capitalists can look to ultimate ability, and buy up the notes from the necessitous and the alarmed. To them ultimate ability is sufficient; to the community |