fiS ptescriktl by the act of 1815,a. tmurce 1 . 1
rather of embarrassment than Mo., an.ti of t
necessity placed th.t custuts.y of most of t
the public money Oen! ird collected in t
eharike of the public. u ir, e ,„ The new ,
securities of its salet , j,- - w hi c h thi s requi
red, was a Prine4le cause of my conve
ning an extra session of Congress; but in
consecrl , ..ce of a disagreement between
the two houses, neither then, nor at any
subsequent period, has there been any i
legislation flit the subject. The effort
made at the last session to obtain the au- 1
thority of Congress to punish the use of
public money fur private purposes as a
clime, a measare attended under other
Governments with signal advantage, was
also unsuccessful, from diversities of o.
pinion in that body, notwithstanding the
anxiety doubtless felt by it to afford every
practicable security. l'he result of this
vs still to leave the custody of the public
money without those safeguards which
have been for several years earnestly deg . '.
red by the Executive; and as the remedy
is only to be found in the action of the
Legislature, it imposes on me the duty of
passing a law providing for the safe keep
tug of the public money : and especially to
ask that it uses for private purposes by
any officers entrusted with it, may be des
dared to be a felony, punishable with pen
alties proportionated to the magnitude of
the oCfence.
The circumstances, added to known de,
fects in the existing laws and unusual de
rangement in the general operation of
bade, have during the last Years, much in
creased the difficulties attendant on the
collect*, keeping, and disbursement of
the revenue, and called forth correspon
ding exertions from those having them in.
charge. Happily these have been success
ful beyond expectation. Vast sums have
been collected and disbursed by the soy
eraldepartments with unexpected cheap
ness and ease; transfers have been readily
made to every part of the Union, however
distant; and defalcations have been far
less than might be anticipated, from the
absence of adequate legal restraints.—
Since the offices of the Treasury and Post
Office departments ware charged wit's the
custody of most of the public moneys re•
ceived by them, there have been collected
sixty six millions of dollars, and exclud
ing the case of the late collector of New
York, the aggregate amount of losses sus
tained in the collection cannot, it is be
lieved, exceed sixty thousand dollars.
The defalcation of the late collector at
that city, of the extent and circumstan
ces of Which Congress has been fully in
fused, ran through all the modes ui keep
ing the public money that have been hith
erto in use, and was distinguished by an
aggravated disregard of duty that broke
through the restraints i"of every system, &
,cannot, therefore,be •uselully referred to
as a test of the comps.rative salety of eith.
er. Additional inbortnation will also be
furnished by the report of the Secretary
of the Treasury, in reply to a call made
upon that officer by the house of Repre
seutatives at the last session, requiring de
tailed information on the subjrct of dc
faults by milutic officers or agents under
each administration, from 1789 to 1837.
This docv.inent will be submitted to you
in afew days. The general results, (in.
dependant of the post office, which is kept
.separately and will be stated by itself,) so
far.as they bear upon this subject, are that
the losses which have been, and are likely
to be, sustained, by any class of agents,
have been--'the greatest by banks, mete
-sling, .as required in the resolution, their
depreciated paper received for public dues
- -that the next largest have been by da.-
bursingofficers and the least by collectors
and receivers. If the losses on duty
bonds are included, they alone will be
threefold the me by collectors and receivers,
'Our whole e xpersence, therefore, furnish
es the strangest evidene that the desired
legislation of Congress is only wanting to
insure in those op :rations, the highest de
gree of security and facility. Such also
appears to have been the experience of
other uatiuns. FEW u the results of in lui.
saes made .by the Set...etary of the Treasu
ry in regard to the pitactice Among them,
1 ate enabled to state:, that in twenty two
out of twenty seven I nreign , governments
f rom which undoubte information has
mass o btained, the pub lic moneys are kept
i n c h arge of public 'Ricers. This con
, currence o f opinion in favor of that sys.
tam is perhaps as great: as exists on any
question of internal adi ninistration.
In the modes of bush less and official re,
straints on disbursing officers, no legal
change was produced by the suspension
of specie payments. The report last re
ferred to will be Mend to contain, also,
much useful information in relation to
this subject.
I havejlereter core assigned to Congress
my reasons for believing that the estate
.
lishtnent of as Independent National
Treasury, as con te. plated by the Consti
tution is necessary to she safe action of
the Federal Clover, Anent. The suspen
sion ut specie 'payes eats in 1837, by the
banks hare the custon'y of the public mos
ney, showed in so alarsning . a degree our
elepeutlance on those institutions for the
perfurinaece of duties required by law,
that i then receo. nro seded Use entire dis
solution of that connection. This recruits
inendation has been, subjected, as 1 desi
red it should be, to serve scrutiny and an
animated discussion; and 1 allo:v myself
to believe that, notwithstanding the natu
ral diversities of opinion which may be an.
ticipated on all subjects involving such
important considerations, it has se cured
in its favor as general a conncurrence of
public sentiment as could be expected on
one of so magnitude:
beat events bare also continued to,
develoae new objections:to such a connec
lion. Seldom is any bank under the exis
tin; system and practice, able to meet on
demand, all its liabilities for deposits and
notes in circulalioa. It maintains spe
cie payments, and transacts a profitable
business, only by the confidence of the
:iublic in its solvency; and whenever this
s destroyed, the demands of its depo.i•
• tors and notehohl, re—pressed more rapid
!y thin it can make collections from its
lebtors, force it to stop payment—This
loss of confidence with its consequences
occurred in 1837 afforded the apology of
the banks for their suspension. The pub
lic then acquiesced in the validity of the
excuse; and, while the State Legislatures
did not exact from them their forfeited
charters, Congress, in accordance with
the recommendation ut the Executive, al
lowed them time to pay over the public
money they held, although compelled to
issue Treasury notes to supply the defi
ciency thus created,
It now appears there are other motive
than a want of public confidence under
which the banks seek to justify themselves
in a refusal to meet their obligations
Scarcely were the country and Govern
ment relieved, in a de.zree, by the diffi
culties occasioned by 'the general suspen
sion of 1837 when a partial one, occur •
ring within thirty months of the forme!',
produced new and serious embarrssirents,
though it had no palliation in such eircume
stances as were alleged in justification of
that which have previously taken place,
There was nothing in the condition of
the country to endanger a well managed
banking institution; commerce was de•
ranged by no foreign war; every branch of
manufacturing, iudustry was crowned
with rich ewards; and the more than u•
sual abundance Pf our I myest •, after stip
plying our domestic watt ts, had left our
granaries and storehouses filled With a
surplus for exportation. Um in the midst
01 this, that an irredeemable and depre
deemable and depreciated paper curt en
cy is entailed upon the people by a large
portion of the banks. '1 hey are not driv
en to it by the exhibition of a loss of pub.
lie confidence, or of a sudden pressure
from their depositors or noteholders, but
they excuse themselves by alleging that
the current of busincsi, and , xchange
with forcing countries, which draws the
precious metals from their vaults, would
require, in order to meet it, a large cur
tailment of their loans to a comparatively
small portion of the community, than it
will be convenient for them to bear, or
pet haps safe for the banks to exact. The
plea has seased to be one of necessity.—
Convenience and policy are now deemed
sufficient to warrant these institutions in
disregard of their solemn obligations.,
Such conduct is not merely an injury to
individual creditors, but it is a wrong to'
the whole community, front whose liberal.
ity they hold most valuable privileges—
whose rights they violate, whose business
they derange, and the value of whose
property they render unstable and insee
cure. It must be evident that this new
ground for bank suspensions, hi reference
to which their action is not only discon•
netted with, but wholly independent of,
that of the public, gives a power to their
suspensions more alarming than any
which they exhibited before, and greatly
increases the impropriety of relying on
the banks in the traneaction of the Oovern•
anent.
A large and highly respectable portion
of our banking institutions are, it affords
me unfeignded pleasare to state, exempt
ed from all blame on account of this se•
cond delinquency. 'They have to their
great credit, not only continued to meet
their engagements, but have even reputlia•
ted the grounds of suspension now resort
ed to. It is only by such a course that
the confidence and good will of the cont
munity can be preserved, and in the sequel
the best interest of the institutions them
selves promoted.
New dangers to the banks are daily
disclosed from the extension oi this system
of extravagant credit of which they are
the pillars, Formerly our commerce was
paincipally founded on an exchange of
commodities, including the precious met
als, (St leaving in its transactions but little
foreign debt. Such is now the case. Aided
by the facilities afforded by the banks,
mere credit has become too coinonly the
bases of trade. Many of the banks them
selves, not content with largely stimula.
ting this system among others, have usur
ped the business, while they impure the
stability of the mercantile community;,
they have become borrowers instead of len
ders; they establish their agencies abroad
they deal largely in stuck and inerchan
disc; they encourage the issues of state
securities until the foreign market is glut
ted with them; and, unsatisfied with the
legitimate use of their own capital and the
exercise of their lawful privileges, they
raise, by large loans, additional means for
every variety of speculation. The discs.
ter, attended on this deviation from the
former course of business in this country,
are now shared alike by banks and individ.
nal*, to an extent of which there is per.
haps no previous example in the annals of
our country. So long as a willingness of
the foreign lender, and a sufficient export
of our productions to meet any necessary
partial payments, leave the flow of credit
undisturbed, all appears to be prosperous;
but as soon as it is checked by any hesita.
lion abroad, or by any inability to make
payment there in our productions, the e
vils of the system are disclosed. The pa.
per currency which might serve fur do
mestic purposes, is useless to pay the
debt doe in Europe. Gold and silver are
therefore drawn in exchange for thei
notcat from the :Alas. To keep up their
supply of coin, these institutions are obli•
ged to call upon their own debtors, who
pay them principally in their own notes,
which are so unavailable to them as they
are to the merchants to meet their fOreign
demand. The calls of the banks, there-1
fore, in such emergencies, of necessity,
exceed the demand, and produce a cor-1
re,pending curtailment of their accommu.
dations and of the currency, at the very
moment when the state of trade renders •
lit most inconvenient to be borne. The
'intensity of this pressure on the commu
nity is in proportion to the previous liber
ality of credit and consequent expansion
of the currency; forced sales of property
are made at the time when the means of
purchasing are most reduced, and the
worst calamities to individuals are only
at last arrested, by an open violation of
their obligations by the banks, a refusal to
pay specie for their notes, and an imposi
tion upon the community of a fluctuating
and depreciated currency.
These consequences are inherent in the
present system. They are not influenced
by the banks being large or small, created ,
by National or State Governments. 'They'.
are the results of the irresistable laws of
'trade and credit. In the recent events
which have so strikingly illustrated the
certain effects of these laws, we have seen
the bank of the largest capital in the Uni
on, established under a National charter,
and lateiy strengthened, as we are author
itively exc%soging that for a
State charter, with new add unusual pri
vileges—ia a condition, too, as it was said,
of entire soundness and great prosperity
—net merely unable to resist these effects,
but the first to yield to them.
Nor is to be overlooked that there exists
a chain of necessary dependance among
these institutions which obliges them to a
great extent, to follow the course of otliers,
notwithstauding its injustice to their own.
immediate creditors, or injury to the par
ticular community in which they are pla
ced. This dependant,:: of a bank, which
is in proportion to the extent or as debts
for circulation and deposites, is not mer::..
on others in its own vicinity, but on all
those which connect it with the centre of
trade. Distant banks may fail, wit eut
seriously affecting those in our pri
commercial cities; but the failure of the
latter at the extremities of the Union.—
The suspension at New York, in 1837,
was everywhere, with very few excep
tions, followed, as soon as it was known ;
that recently at Philadelphia immediately
affected the banks of the South and West
in a similar manner. This dependance of
our whole banking system on the institu•
dons in a few large cities, is not found in,
the laws of their erganization, but in those!
of trade and exchange. • The banks at
that centre to which currency flows, and
where it is required in payments for mer
chandise, hold the power of controlling
those in regions whence it comes, while
the latter possesses no means of restrain
ing them; so that the vieue of individual
property, and the prosperity of trade, thro'
the whole interior of the countev, are
made to depend on the good or bad man
agement of the banking institutions in the
great seats of trade on the seaboard.
But this chain of dermlence does not
'stop here. It does not terminate at Phil
adelphia or New York. It reaches toross
the ocean, and ends in London, the cen•
tee of the credit system. The same laws
of trade, which give to the banks in our
principal cities power over the whole
banking system of the United States, sub
ject the former, in their turn, to the mon
ey' power in Ureat Britain. It is not de
nied that the suspen-don of the New York
banks in 1837, which was followed in
quick succession throughout the Union,,
was produced by an upplication of that
power; and it is now alleged, in exteuua •
lion of the present condition of so large a
portion of our banks, that their embar
rassments have arisen from the same
cause.
From this influence they cannot now
entirely escape, for it has its origin in the
credit securities of the two countries ; it
is strengthened by the current of trade
and exchange, which centres in London,
and ►t ►s rendered almost irresistahle by
the large debts contracted there by our
merchants, our banks and our states. It
is thus that an introduction of a new hank
into the most distant ()four villages, pla
ces the business of that village within the
influence of the money power of England.
It is thus that every new debt which we
contract in that country, seriously affects
our own currency, and extends over the
pursuits of our citizens its powerful influ
ence. We cannot escape from this by
making new banks, great or small, State
or National. 'rile same chains which bind
those now existing to the centre of this
system of paper credit, must equally fet
ter every similar institution we create.—
It is only by the extent to which this sys.
tem has been pushed of late, that we have
been made fully aware of its irresistable
tendent.y to subject our own banks and
currency to a vast controlling power in a
foreign land; and it adds a new argument
to those •vhich illustrate their precarious
situation. Endangered in the first place
by their own mismanagement, and again
by the conduct of every institution which
connect them with the centre of trade in
our own country, they are yet subjected,
beyond all this, to the effect of whatever
means, policy, necessity, or caprice may
induce those who control the credits of
England to resort to. 1 mean not to coin-,
►nett upon these measures, present or past, l
and much less to discourage the prosecu.'
tion of fair commercial dealings between
the two countries, based on reciprocal
benefits, but it having now been made
manifest that the power of inflicting these,
and similar injuries, is, by the resistless
law of a credit currency an,l credit trade,
equally capable of extending their come quences throug all the ramifications of our
banking system, and by that means inch.
Irectly obtaining, particularly when our
banks are used as depositories of the pub
lie mrn,ys, a dangerous political influenc e
in the United States, 1 have deemed it my
duty to bring the subject to your notic
'and ask fur it your serious confideratiun.
Is an argument required beyond the expo
sitions of th ese facts, to show the impropriety
of using our banking institutions as deposito
ries of the public mone} ? Can we venture
not only to encounter the risk of their indi
vidual and mutual mismanagement, but, at
the same time, to place our foreign and do
mestic policy entirely under the control of a
foreign moneyed interest? To do so, is to
impair the Independence of our Govern
ment, as the present credit system has al
ready impaired the independence of our
banks. It is to submit all its importint ope
rations, whether of peace or of war, to be
controlled or thwarted at first by our own
banks, and then by a power abroad greater
than themselves. I cannot bring myself to
depict the humiliation to which this Gov
ernment and people Might be sooner or 'octet
reduced, it the means for defendin their
rights are to be made dependant upon those
who may have the most powerful of motives
to impair t h em.
_ _
Nuc is it only in reference to the effect of
this state of things on the independence of
our Government or of our banks, that the
subject presents itself for consideration; it is
to be viewed also in its relations to the gen
eral trade of one country. The time is not
long past when a deficiency of foreign crops
was thought to afford a pri.fitable market tor,
the surplus of our ihdustry; but now we
I await with feverish anxiety the news of the
Eng:ish harvest, not so much from motives
of cm,. mendable sympathy, but fearful lest
it s anticipated lu re should narrow the field
of credit there. Does not this speak volumes
to the patriot? Can a system be beneficent,
wise or just, which creates greater anxiety
for interests dependant on foreign credit,
than for the general prosperity of our own .
country, and the profitable exportation of
the surplus fruits of our labor?
The circumstances to which I have thus
adverted appear to ire to'afford weighty rea
sons, developed by late events, to be added
to those which I have on former occasions
()tiered, when submitting to your better
k aa vded;ed and discernment the propriety
of eeparating the custody of the public money
from banking institu:., o ;ls. , , Nor has any
i n my opinion, the
force
of
u w r l e vi d t to less has en,
been heretote;::: urged.
The only ground on which that custody ca;:
be desired by the banks, is the profitable use
which they may make of the money. Such
use would be regarded in inejvidpals as a
breach of trust, or crime of great ma "nitude,
and yet it may be reasonably doubtectwheth
er, first or last, it is not attended with more
mischievous consequences, when permitted
to the former titan the latter. The practice
of permitting the public money to be used by
its keepers as here, is believed to be peculiar
to this country, and to exist scarcely any
where else. To procure it here, improper
influences are appealed to; unwise connec
tions are established between the Govern
ment and vast numbers of powerful State in.
stitutions- ' other motives than the public good
are brought to bear both on the Executive
and Legislative departments, and selfish com
binations, leading to special legislation, are
formed. It is made the interest of the bank
ing institutions and their stockholders
throughout the Union to use their exertions
for the increase of taxation and accumulation
of a surplus revenue; and while an excuse is
afforded, the means are furnished for those
excessive issues which lead to extravagant
trading and speculation, and are the forerun
ners era vast debt abroad, and a suspension
of the banks at home.
Impressed, therefore, as I am, with the
propriety of the funds of the Government be
ing withdrawn from the private use of either
banks or individuals, and the public money
kept by duly appointed agents; and believing
as do, that such also is the jugment which
discussion, reflection and experience have
produced on the public mind, I leave the sub
ject with you . It is, at all events, essential
to the interests of the community and the
business of the Government, that a decision
should be made.
Most of the arguments that dissuade us
from employing banks in the custody and
disbursement of the public money apply, with
equal force, to the receipt of their notes for
public dues. The difference is only in form.
In one instance the Government is a creditor
for its doposites, and in the other for the notes
it holds. They afliird the same opportunity
for using the public moneys, and equally lead
to all the evils attendant upon it, since a bank
can as safely extend its discounts on a de.
polite of its notes in the hands of a public
officer, as on one made in its own vaults. On
the other hand, it would give to the govern
ment no greater security; for, in case of fai
lure, the claim of the noteholder would be no
better than that of a depositor.
I am aware that she danger of inconven
ience to the public and unreasonable pressure
upon sound banks have been urged as objec
tions to requiring the payment of the revenue
in gold and silver.—These objections have
been greatly exaggerated. From the best
estimates we may safely fix the amount of
specie in the country at eighty-five millions
of dollars, and the portion of that which would
be employed at any one time in the receipts
and disbursements of the Government, even
if the proposed change was made at once,
would not, it is now, after fuller investigation
believed, exceed four or five millions. If the
change were gradual, several years would
elapse before that sum would be required,
with annual opportunities, in the mean time
to alter the law, should experience prove it
to be oppressive or inconvenient. The por
tions of the community on whose business the
change would immediately operate, are com
paratively small, nor is it believed that its
effect would be in the least unjust. or injuri.
ous to them.
In the payment of duties, which constitute
by far the greater portion of the revenue, a
very large proportion is derived from foreign
commission houses and agents of foreign
manufacturers, who sell the goods consigned
to them generally, at auction, and after pay
ing the duties out of the avails, remit the rest
abroad in specie or its equivalent. That the
amount of duties should, in such cases, be
also retained in specie, can hardly be made
a matter of complaint. Our own importing
merchants, by whom the residue of the duties
is paid, are not only peculiarly interested inl
maintaining a sound currency, which the
measure in question will especially promote
but are, from the nature of their dealings,
best able to know when specie will he needed
and to proctire it with the least difficulty or
sacrifice. Residing, too, almost universally
in places where the revenue is received, and
where the drafts used by the Government for
its disbursements must consecrate, they have
every opportunity to obtain and use them in
place of specie, should it be for their interest
or convenience. Of the number of these
drafts, and the facilities they may afford, as
well as of the rapidity with which the public
funds gro drawn and disbursed, an idea may
be formed from the fact that, of nearly twenty- ,
millions of dollars paid to collectors and re-,
oeivers during the present year, the average,
=mini, in their hands at any one time has,
not exceeded a million and a half, and of the'
fifteen millions received by the collectors of
New Yurk alone during the prey-nt year, the
average amount held by him, no ject to draft
during each week, has been less than half a
million.
The case and safety of the operations of
the Treasury in keeping the public money.
are promoted by the application of its own
drafts to the public dues. The objection ari
sing from having them too long out standing,
might be obviated, and they yet made to at
ford to merchants and banks holding them an
equivalent for specie, and in that way great
ly lessen the amount actual) required. Still
less inconvenience will attend the require
!
ment of specie in purchases of public lands.
Suctl purchases, except when made en specu
lation, are in general, but single transactions,
rarely repeated by the same person; and it
is a fact, that for the last year and a half, du
ring which the notes of sound banks have
been received, more than a moiety of these
payments has been voluntarily made in specie
being a larger proportion than would have
been required in three years under the grad
, uation proposed.
! It is moreover a principle than which none
is better settled by experience, that the sup-I
ply of the precious metals will always be,
fuund adequate to the uses for which they
are required. They abound in countries;
where no other currency is allowed. In our
own states, where sisal! notes are excluded,
gold and silver supply their place.—When
! driven to their hiding places by bank suspen
sions, a little firmoese in the community soon
restores them in a sufficient quantity fur or
dinary purposes. Postage and other public
l
dues have been collected in coin, without seri
ous inconvenience, even in states where a
depreciated paper currency has existed furl
years, and this, with the aid uf Treasury notes
for a part of the time, was done without in
terruption during the suspension of 1837. At.
: the preint moment, the receipts and clisburs-I
menus of the bi o ,,ernment are made in legal'
currency in the largest pu3ion of the . Unionl
—no one suggests a departure front thiLl rule
and if it can now be successfully carried out
it will be surely attended with even less
difficulty when bank notes are again redeem
ed in spew.
Indeed I cannot think that a serious objec
tion would any were be raised to the receipt
and payment of gold mad silver in all public
transactions, were it not from an apprehen
sion that a surplus in the Treasury might
withdraw a large portion or it from circula
tion, and lock it up unprofitably in the public
vaults. It would not in my opinion, be dif
ficult to prevent such an inconvenience from
occurring; but the authentic statements which
I have already submitted to you in regard to
the actual amount in the public Treasury at
any one time during the period embraced in
them, and the probability of a different state
of the Treasury for at least some years to
come, seem to render it unnecessary to dwell
upon it. Congress, as I have before observed
will in every year have an opportunity to
guard against it, should the occurrence of
any circumstances lead us to apprend injury
from this source. Viewing the subject in
all its aspects, I cannot believe that any
period will be more auspicious than tho pre
sent for the adoption of all measures neces
sary to maintain the sanctity of our own en
gagements, and to aid in securing to the
community that abundant supply of the preci
ous metals which adds so much to their pros
perity and gives such increased stability to
all their dealings.
In a country so commercial as ours, banks
in sumo form will always exist; but this ser
ves only to render it the more incumbent on
us, notwithstanding the discouragements of
the past, tostrive in our respective stations
to mitigate the evils they produce; to take
from them as rapidly as the obligations of
public faith and a careful consideration of the
immediate interests of the community will
permit, the unjust character of monopolies; to
check so ter as may be practicable by pru
dent legislation, those temptations of interest
and those opportunities fur their dangerous
indulgence, which beset them on every side,
and to confine them strictly to the performance
of their paramount duty,lbat of aiding the
operations of commerce, rather than consul
ting their own exclusive advantage. These
ana other salutary releme may, it is believed,
bo accomplished without the violation of any!
Institutions so framed have existed and still
mad elsewhere, giving to commercial inter
course all necessary facilities, without infla
ting or depreciating the currency, or stimula
ting speculation. Thus accomplishing their,
legitimate ends, they have gained the surest
guarantee for their protection and encourage.
sent in the good will of the community.
Among a people so just as ours, the sawn re
sults could not failto attend a similar course,
of the great principles of the social compact,
the observance of which is indispensable to
its existence, or interfering in any way vt oh
the useful and profitable employ met of real
capital.
The direct supervision' of the banks belongs ,
from the nature of our Government, to th e
States who authorize them. It is to their
legislatures that the people must mainly look
fOr action on that subject. But as the con
duct of the Federal Government in the mana
gement of its revenue has also a powerful,
though less immediate influence upon them
it becomes our duty to see that a proper direc
tion is given to it, While the keeping of the
public revenue in a separate and independent
Treasury, and of collecting it in gold and
silver, will have a salutary influence on the
system of paper credit with which all banks
are co intyted and thus aid those that are
sound and e.ell managed, it will at the same
time sensibly check such as are otherwise, by
at once withholding the means of extraVa•
fiance afforded by the public funds, and res
training them from excessive issues of notes
which they would be constantly called upO u
to redeem.
I am aware it has been urged that this con
trol may be beat attained and exerted by
means of a National Bank. The constitutional
objections which I am well known to enter
tain, would prevent me in any event from pro-
Iposing or assenting to that remedy ; but in
addition to this, I cannot,after past experience.
bring myself to think that it can any longer
be extensively regarded as effective for such
a purpose. The history of the late National
'Sank through all its mutations, shows that it
was not so. On the contrary, it may, after a
'carefulc consideration of the subject, be, I
think, safely stated, that at every period of'
banking excess it took the lead ; that In 1817
and 1818, in 1823, in 1831, and in 1834, its
vast expansions, followed by diatresing con
tractions, led to those of the State institutions.
It swelled and maddened the tides of the
banking system, but seldom allayed, or safely
directed them.
At a few periods only was a salutary conk
trol exercised, but an eager desire, en the
contrary exhibited for profit in the first place;
and if; afterward, its measures were severe
towards other institutions, it was because its
own safety comdelled it to apupt them. It
did not differ from them in principle or in
form ; its measures emanated from the spirit
again ; it felt the same temptation to over
issues; it suffered front and was totally una
ble to avert, those inevitable laws or t rads,
by which it was itself affected equally with
them; and at least on one occasion et an
early day, it was saved only by extraordinary
exertions from the same fate that attended
the weaker institutions it professed to 'niter.
vise.
Jn 1837 it failed, equally with others, in
redeeming its notes, though the two years
allowed by its charter for that purpose had
not expired, a large amount of which remains
to the present time outstanding. It is true,
that having so vast a capitahand etrengliened
by the use of all the revenues of the Govern
ment, it possessed more power; but while it
was itself, by that circumstance, freed from
the control of which all banks require, its
(paramount object and inducement were le't
the same—to make the most for its stock
!holders, not to regulate the currency. Nor
has it, as far as we are advised, been found to
be greatly otherwise elsewhere. The na
tional character given to the bank of England
has not prevented excessive fluctuations in
their currency, and it proved unable to keep
off a suspension of specie payments, which
lasted fur nearly a quarter of a century.—
And why should we expect it to be otherwise'
A national institution, though deriving its
charter from a different source than the
State Banks, is yet conbtituted upon the same
principles: is conducted by men equally ex
posed to temptation ; and is liable to the same
disasters, with the additional disadvantage
that its magnitude occasions an extent of
confusion and distress which the mismanage
ment ofamaller institutions could not preduce..
It can scarcely be doubted that the recent
suspension of the United States Bank of
Pennsylvania, of which the effects are felt
not in that State alone, but over half the
Union, has its origin in a course of business
commenced while it was a national institu
tion ; and there is no good reason for suppos
ing that the same consequences would not
have followed had it still derived its powers
from the General Government. It is in vain,
when the influences and impulses are tke
same, to look for a difference in conduct or
results.
By such creations we do, therefore, but
increase the mass of paper credit and paper
currency, without checking their attendant
evils and fluctuations. 'The extent or power
and•the efficiency of organization- which we
give, so far from being beneficial,'are, inr
practice,pos►ttvely ingiries. They strengthen
the chain of dependence throughout the
Union, subjects all parts more certainly to
common disaster, and bind every bunie more
effectually, in the first instance, to those of
our commercial cities, and, in the end, to a
foreign power. In a word I cannot Lwt be
lieve that, with the full understandm , t . of the
operations of our banking system e•l:ich ex
perience has produced, public ,entiment is
not less opposed to the creation of• It National
Bank, for purposes connected with currency
.and commerce, than for those connected with
tho fiscal operations of the Government.
Yet the * commerce and currency of the
country are suffering evils from the operations
of the State banks which cannot sod ought
not to be overlooked. By their means, we
have been flooded with a depreciated paper.
which it was et idently the design of the
framers of the Constitution to prevent, when
they required Congress to "coin money and
regulate the value of foreign coins," and
when they forbade the States "to coin money,
' emit bills of credit, make anis thing but gold
and silver a tender in payments of debts," or
" pass any law impairing the obligation of
contracts." If they did not guard more ex
',licitly against the present state of things, it
was because they could not have anticipated
that the few banks then existing were to
swell to an extent whizli would expel to so
great a degree the gold and silver, for which
they had provided, from the chanels of cir•
culation, and fill them with a currency that
defeats the objects they had in view. The
remepy for this must chiefly rest with the
States from whose legislation it has sprang.
No good that might accrue in a particular
case fawn the exercise of power, not obviously
conferred on the General Government, would
authorise its interference, or justify a course
that might, in the slightest degree increase,
at the expense of the States, the power of
the Federal authorities—nor do I donbt that
the States, will apply the remedy.
Within the last few years, events have ap
pealed to them to strongly to be disregarded.
Fliey have seen that the Constitution, though
theoretically adhered to, is subverted in prac
tice; that while on the statue books there in
no legal tender but gold and silver, no law
imparing the obligations of contracts, yet
that, point of fact, the privileges conferred
on banking corporations have made their
notes the currency of the country ; that the
obligations imposed by these notes are viola,
ted under the impulses of interestor conveni
ence : and that the number and power of the
perilous connected with these corporations, or
placed under their influence, give them a
fearful weight when their interest is in (TPO
- to the spirit of the Constitution and
laws. To the people it is immaterial whether
these resnits are produced by open violations
of the latter, cr by the workings of a system
of which the result is the same. An inflexi
tile execution even of the exisiing statutes of
most of the States, would redrtss many evila
now endured; would effectually utiow