Camden commercial courier. (Camden, S.C.) 1837-1838, September 16, 1837, Image 2
SUlments under the deposits Uw became ' i
ptyabb, theirowo embarrassments, and I
the necessity under which' they lay, Of
curtailing their discounts and calling in
ffteir debts, increased the general distress,
ami contributed, wjth other causes, to
hasten the revulsion in which, at length,
they, in common with the other banks,
^trere fatally involved.
(Jnder these circumstances, It becomes
our solemn duty to inquire whether there
are not, in any connection between the
Government and the banks of issue, evils
of great magnitude, inherent in its very
nature; and against which no .precautions
?can enecuiany guard. 1
Unforeseen in the organization of the
'Government* ami forced on the Treasury
'by early necessities, the practice of em*
ploying banks, was, in truth, from the beginning,
more a measure )f emergency
than of sound policy. When we started
into existence as a nation, in addition to
the burdens of the new Government, we
assumed all the large but honorable load
of debt which was the price of utir liberty;
bo*, we hesitated to weigh down tne infant
industry of the country by resorting
to adequate taxation f>r the necessary
revenue. The facilities of Banks, in return
for the pivileges they acquired, were
promptly offered, and perhaps too readily
received, by an embarrassed Treasury.?
Du ring the long continuance of a nation- <
al debt, and the inervening difficulties of <
a foreign war, the connection was con- i
tinned from motives of convenience; but '
these causes have long since passed away. <
Wo have no emergencies that make banks f
necessary t? aid the wants of the Treasury;
we have 11 load of national debt to i
provide for, and we have on actual de- <
posite a lanje surplus. No public in s
teres!, therefore, now i quires ihe renewal
of a connecti -n that circumstances have i
dissolved. The complete organization of i
our Government, the abundance of our
resources, the general harmony which <
prevails between the different Slates, and I
with foreign Powers, all enable us now to I
select the system most consistent with the t
Constitution, and most conducive t > the 1
public welfare. Shoultl wc then, connect I
the Treasury for a fourth lime with the t
local banks, it can only be under a con- \
viction that past failures have arisen from s
accidental, not inherent defects. t
A d inger, lillicult, if not impossible to i
oe avoided tt? surd an arrangement, is I
made strikingly evident in the very event I
by which it has now been defeated* A I
su hlen act of the hanks intrusted with c
the funds of the people, deprives the n
Treasury, without fault or agency of the r
* Government, of the ability to pay its t
creditors in the currency they have by law e
a right to demand. This circumstance no p
fluctuation <?f commerce could have pro- e
duccd, if the public revenue had been t
collected in the legal currency, ami kept i
in that form by the oiliccrs of the Trrasu- <
ry. The rit zen whose money was in
bunk receives it back, since the suspen-[t
sion, at a sacrifice in its amount; whilst I
he who kept it in the legal currency of the t
country, and in his own possession, pnr- f
sues without loss,tire curreutofliis business, j
The Government, placed in the situation t
of the former, is involved in embarrass- is
merits it could not have suffered had it tl
pursued the course of the latter. These
embarrassments are, moreover, augmcu- n
ted by those salutary and just laws which r;
forbid it to use a depreciated currency, ti
and, by so doing, take from the Govern- t
ment the ability which individuals have of ll
accommodating their transactions to such f
a catastrophe. f
A system which can, in a time of pro- v
found peace, when there is a large reve- '1
tnue laid by, thus suddenly prevent the ap- <1
plication ami the use of the money of the i
people, in the manner and for the objects <
they have directed, 'cannot be wise; hut t
who can think; without painful reflection, 1
that, under it, the same unforsecn events I
might have befallen lis m the midst of a I
war, and taken from us, at the moment (
when most wanted, the use of those very <
means which weie treasured up to pro- |
mote the national welfare and guard our s
national rights ? To such embarrassments
and to such dangers will this Govern- t
ment be always exposed, whilst it takes t
the money raised for, and necessary to ?
the public service, out of the hands of its 1
own officers, and converts them into a't
mere right of action against corporations ?
entrusted with the possession of them i
Nor can such results be effectually guar- t
ded against in such a system, without in <
Testing the Executive with n control over |
the banks themselves, whether State or i
National, that might will) reason be ob- I
jected to. Ours is, probably, the only <
Government in tho world that is liable, in '
the management of its fiscal concerns, to
occurrences like these. But this irnmi- I
Dent risk is not the only danger attendantil
on the surrender of the public money to J:
the custody and control of local eorporalions.
Though the object is aid to the
'Treasury, its effects may be introduced
into me operations or the U yernment,'
influences the most subtle, founded on interests
the most selfish.
The use by the banks, for their own
benefit, of the money deposited tvidi them,
has received the sanction of the Government
from the commencement of this
connection. The money received from <
the people, instead of b?'ing kept till it is1
needed for their use, is, in consequence of i
this authority, a fund, on which discounts i
are made for the profit of those who hap- <
pen to be owners of stock in the banks f
selected as depositories. The supposed \
and often exaggerated advantages of such r
a boon will always cause it to be sought's
for with avidity. I will not slop to con-;t
i
f
V
rider on ttfctobi the patronage'iiieitfent to
ii U to bieonfer redwhether'the selec*
lion uri^tntroi be trusted tO'Congreas otr
in the Executive, either will be subjeeted
to tpptill made in eeery form which the
sagacity of interest cen suggest. The
banks, under such i system, ere stimuli*
ted to mjritcr the most of their fortunate
acquisition; the depositee ere treated as
an incrfgse of capital; loans and circulation
are rashly augmented, and when
th>* mihlii* aannciM r#>nuiro Miurn St i?
attended with embarrassments not provided
Cor, nor foreseen. Thus banks that
Ihoefiht themselves most fortunate when
the public funds were received, find themselves
most embarrassed when the season
of payment suddenly arrives.
Unfortunately, too, the evils af the system
are not limited to the batiks. It
stimulates a general rashness of enterprise,
and aggravates the fluctuations of commerce
and the currency. This result was
strikingly exhibited during the operations
of the lato deposits system, and especially
in the purchase of public lands. The
order which ultimately directed the payment
of gold and silver in such purchases,
greatly checked, but could not altogether
prevent the evil. Specie was indeed
more difficult to be procured than the
notes which the banks could themselves
ceateat pleasure; but still, being obtained
from them as a loan, and returned as a
ileposite, which they were again at liberty
to use, it only passed round the circle
ivit'h diminished speed. This operation
oiild not have been performed, had the
'unds of the Government gone into the
Freasury, to be regularly disbursed, and
not into banks, to be loaned out for their
jwn profit, " bile they were permitted to
substitute for it a credit in account.
In expressing these sentiments, I desire
tot to undervalue the benefits of a saluta'v
credit to any branch of enterprise,
rhe credit bestowed on probity and inlustry
is the just reward of merit, and an
i'?nor tble incentive to further acquisition.
V ?ne oppose it who love their country
ind understand its welfare. But when it
s unduly encouraged - when it is made
o inflime the public mind with tne tempaiions
of sudden and unsubstantial wealth,
vhen it turns industry into paths that lead
tooner or later to disappointment and disress?it
becomes liable to censure, and
leeds correction. Far from helping pro?fiy
and industry,^ the ruin to which it
ead-j falls most severely on the great la>
?ring classes, who are thrown suddenly
nit of employment, and by the failure of
natruificerit schemes never intended to en
ich them, are deprived in a moment of
heir only resource. Abuse of credit and
xcess in speculation will happen in desi?U*
of the most salutary laws; no Gov.
rnme- t perhaps can altogether prevent
hen*; hut surely every Government can
-efrain from contributing the stimulous that
alls them into life.
Since, therefore, experience has shown,
hat to lend the public money to the local
milks, is hazardous to the operations of
he Government, at least of doubtful bene*
it to the institutions themselves; and
irodiirfive of disastrous derangement in
lie business and currency of the country,
i it the part of wisdom again to renew .
le connection ? 1
It is true that such an agency is in
lany respects convenient to the Trcasuy,
but it is not indispensable. A limitamn
of the expenses of the Government
i) its actual wants, and of the revenue to
hose expenses, with convenient means
or its prompt application to the purposes
or which it was rained, arc the objects
rhich we should seek to accomplish.?
rhe collection, safe-keeping, transfer and
lishursement of the public money, can, it
s believed, he well managed by officers
>f the Government. Its collection, and
o a great extent, its disbursement also,
lave indeed been hitherto conductedsoley
by them ; neither Na'ional nor State
>anks when employed, being required to
lo more than keep it safely while in their
Mistody, and transfer and pay it in such
proportions and at such times as the Treautry
sh ill direct.
Sorely banks are not more able than
he Government to secure the money in
heir possession against accident, violence,
>r fraud.- The assertion that they are so,
nust assume that u vault in a bank is
Uronger than a vault in the Treasury ,
md that directors, cashiers, and clerks,
run selected by the Government, nor
jnder its control, are mote worthy of
jonfidcnce than officers selected from the
paople and responsible to the Government;
officers bound by official oaths and
lii nds for a faithful performrncc ?! their
Jtilies, and constantly subject to the supervision
of Congress.
The difficulties of transfer, nrwl
heretofore rendered by banks, have been i
less than is usually supposed. The actu-'
al accounts show that by far the large
portion of payments is made within short
or convenient distances from the places of J
collection ; and the whole number of warrants
issued at the Treasury in the year'
1834?a year, the results of which will it I
is believed afford a safe test for the future, j
fell short of live thousand, or an average'
of less than one daily for each Stale ; in i
the city of New York they did not aver-'
age more than two a day, and at tho city
of tViishiMgton only four.
The difficulties heretofore existing arc,
moreover, daily lessened by an increase
in the cheapness and facility of communication;
and it may be asserted with conidence,
that the necessary transfers, as
veil as the safe-keeping and disburse-,
ncnts of the public moneys, can be with
afety and convenience arcomplishe I thro'
he agencies of the Treasury officers.?
ffcis opinion hat been, in come degree,
confirmed by actual experience ainee the
| (IUcontl?uabc(H)i the banks at fiscal tgeon,
1 in May lest; a period which from the emI
barrassmente in commercial intercourse*
presented obstacles as ubt as any that
may be hereafter apprehended.
The manner of keeping thespubKc money
since that period, is ftilly slated in the
report of the (Secretary of the Treasury.
That officer also suggests the propriety of
aasigoing by law, certain additional du*
ties to existing establishments and officers,
which, with the modifications and safeguards
referred to by him, will, he thinks,
enable the Department to continue to perform
this branch of the public service,
without any material addition either to
?k.!a niltnko. A. tn tkn .iaaaam. i
iiuilli/i v* IMV j/irpcill CA I'CIIOr*
The extent of the business to be transacted
has already been stated1; and in respect
to the amount of money with which
the officers employed would be entrusted
at any one time, it appears that, assuming
a balance of five millions to be at all times
kept in the Treasury, and the whole of it)
left in the hands of the collectors and receivers,
the proportion of each would not1
exceed an average of thirty thousand
dollars; but that, deducting one million
for the use of the mint, and assuming the
remaining four millions to be in the hands'
of one-half of the present number of officers?a
supposition deemed more likely
to correspond with the fact?the sum in
the hands of each would still be loss than
the amount of most of the bonds now,
taken from the receivers of public money.
Every apprehension, however, on the
subject, either in respect to the safety of
the money, or the faithful discharge of
these fiscal transactions, may, it appears
to me, be effectually removed by adding
to the present means ol the Treasury the
establishment by law, at a few important
points, of the offices for the deposite and
disbursement of such portions of the
public revenue as cannot, without obvious
safety and convenience, be left in the
possession of the collecting officers until
paid over by them to the public creditors. [
Neither the amounts retained in their;
. I -1 ! 1 - -
aims, nwr ulUbU ueposilCU in Hie OI11C6S,
would, ill an ordinary condition of the i
revenue, be larger in most cases than 1
those often under the control of disbursing 1
officers of the Army and Navy, and might
be made entirely safe, by requiring such
securities,and exercising such controlling i
supervision, as Congress may by law pre- i
scribe. The principal officers whose op- 1
poiuttncnis would become necessary under i
this plan, taking the largest number sug- <
gested by the Secretary of the Treasury,
would not exceed ten; nor the additional I
expenses, at the same estimate, sixty thou- 1
sand dollars a year. 1
There can be no doubt of the obligation |
of those who are entrusted with the alfairs '
of the Govei nment, to conduct them with <
as little cost to the nation as is consistent I
with the public interest ; and it is for Con- <
grcss, and ultimately for the people, to I
decide whether the benefits to be derived i
from keeping our fiscal concerns apart, I
and severing the connection which has t
hitherto existed between the Government <
aud banks, offer sufficient ndvaulngcs to I
justify the necessary expenses. If the n
object to be accomplished is deemed im. c
portant to the future welfare of the coun-j
try, I cannot allow myself to believe that
the addition of the public expenditure of
comparatively so small an amount as will
be necessary to effect it, will be objected
to by the people.
It will be seen by the report of the Postmaster
General, herewith communicated,
that the fiscal affairs of that Department
have been successfully conducted since
May last, upon the principle of dealing
only in the legal currency of the United
States, and that it needs no legislation to
maintain its credit, and facilitate the management
of its concerns; the existing
laws being, in the opinion of that officer,
ai iple for those < bjects.
Difficulties will doubtless be encountered
for a season, and increased services
required from the public functionaries ;
such arc usually incident to the commencement
of every system, but they
will he greatly lessened in the progress of
its operations.
The power and influence supposed to
be connected w ith the custody and disbursement
of the public money are topics ?
u:^i. .L. ...
?iii wmrii me puonc inimi is naturally 1
and, and with great propriety, peculiarly ?
sensitive. M ucli has been said on them, <
in reference to the proposed separation of t
the Cover imenl from the banking institu- ?
lions; and surely no one can object to any <
appeals or animadversions on the subject, J
which are consiste nt with facts,and evince i
a proper respect for the intelligence of
the people. If a Chief Magistrate may I
be allowed to speak for himself, on such t
a point, 1 can truly suv, that to me, noth- ?
ing would-be more acceptable, than the t
withdrawal from the Executive, to theit
greatest practicable extent, of all concern <
in the custody and disbursement of the |
public revenue ; not that I would shrink i
from any responsibility cast upon me by t
the duties of my office, but because it is <
my firm belief, that its capacity for useful- <
ness is in no degree prompted by the pos- (
session of any patronage not actually ne- '
I cessarv to the performance of those duties. <
But under our present form of Govern- ?
nicnt, the intervention of the Executive <
officers in the custody and disbursement t
of the public money seems to be unavoid- '
able; and before it can be admitted that '
the influence and power of the Executive i
would be increased by dispensing with <
the agency of banks, the nature of that <
I intervention in such an agency must be I
|carefully regarded, and a comparison
most be instituted between its extent in
in the two eit?$.
The revehtie Ceo only be collected by
officers appointed by the President, with
the advioe and consent of the Senate.?The
public moneys, in the first instance,
most therefore, in all cases, pass through
hands selected "by the 'executive. Other
offices appointed in 4he same/way, or, as
111 some cascf, by the President alone,
moat also be entrusted with them when
drawn for the. purpose of disbursement.
It is Ayt sqen that, even when the barbs
are~employe<Vthe public funds must twice
pass through the hands of the Executive
officers^ Besides tl>is, the head of the
Treasury Department, who also holds his
office at the pleasure of the President, and
Some other officers of the same department,
must neceesarilv be inve?n?H with
more or less power in the selection, continuance
and supervision, -of the hanks
that may he 'Employed. The question is
then narrowed to the single point, whether
in the intermediate stage between the collection
and disbursement of the public
money, the agency of banks is necessary
to avoid a dangerous extension of the
Katfonage and influence of the Executive?
>ut is it clear that the connection of the
executive with powerful moneyed institutions,
capable of ministering to the interests
of men in points where they arc
most accessible to corruption, is less liable
to abuse, than his constitutional agency
in the appointment and control of the ie\y
public officers required by the proposed
plan? Will the public money, when in
their hands be necessarily exposed to any
improper interference on the part of the
Executive? May it not be hoped that a 1
prudent fear of public jealousy and disapprobation,
in a matter so peculiarly exposed
to them, will deter him from any
such interference, even if higher motives
be found inoperative? May not Congress
so regulate, by law, the duty of those officers,
and subject it to such supervision
and publicity, as to prevent the possibility
of any seriou3 abuse on the part of the
Executive? and is there equal room for
such supervision and publicity in a connection
with banks, acting under the
i_ r v*
snieiu 01 corporate immunities, and conducted
by persons irresponsible to the
Government and the people? It is believed
that & considerate and candid investigation
of these questions will result
in the conviction, that the proposed plan
is far less liable to objection, on the score
of Executive patronage and control, than
any bank agency that has been, or can be,
devised.
With these views, I leave to Congress
llie measures necessary to regulate, in the
present emergency, the safe-keeping and
rausfer of the public moneys. In the
performance oi constitutional duty, I have
stated to them, without reserve, the result'
if my own reflections. The subject is of
great importance ; and one on which we
;an scarcely expect to he as united in sentiment
as we arc in interest. It deserves
t full an I free discussion, and cannot fail 1
o be benefitted by u dispassionate com*
/daiouii *'* >> cii aware mysell'
>f ihe duly of reciprocal concession among
he co-ordinate branches of* the Governnent,
I ran promise a reasonable spirit of
:o-operation, so lar as it can be indulged
n without the surrender of constitutional
ibjections* which I believe to be well
ounded. Any system that may be adoptd
should be subjected to the fullest legal
trovision, so as to leave nothing to the
Executive but what is necessary to the
lischarge of the duties imposed on him ;
nid whatever plan may be ultimately esablished,
my own part shall be so dis:har?zed
as to give it a fair trial, and the
>est prospect of success.
The character of the funds to be received
ind disbursed in the transactions of the !
lovcrnment, likewise demands your most
areful consideration.
There can be no doubt tbat those who'
rarned and adopted the Constitution, ha- |
ring in immediate view the depreciated .
in lor (if ll?*? f'diifoiloi'o'." "'
?? " V/WMIVMV. J I VI n HIV II live
tundred dollars in paper were, at limes,
mly equal to one dollar in coin?intended
0 prevent the recurrence of similar evils, |
10 far at least as related to the transac- j
ions of the new Government. Theyj
javc to Congress express powers to coin 1
noney, and to regulate the value thereof,
tnd of foreign coin; they refused to give
t power to establish corporations?the
ige.nts, then as now, chiefly employed to
reale a paper currency; they prohibited |
he Stales from making any thing but gold
ind silver a legal tender in payment of
lebts ; and the first Congress directed, by j
positive law, that the revenue should be
ereived in nothing but gold and silver. i
Public exigency at the outset of the
jovernment, without direct legislative auliority,
led to the use of banks as fiscal ,
lids to the.Treasury. In admitted devia- j
ion from the law, at the same period, and !
1 n/lni* I k A r. A 1 A Aaa U - ? 4 '
uuvsi IIIC name i IIJC? ncCTflHry j
)f the Treasury teceived ihrir notes in j
payment of duties. The sole ground on ;
which the practice, thus commenced, was
hen, or has since been justified, is the
*ertain, immediate and convenient exchange
of such notes for specie. The
government did indeed receive the inconvertible
notes of State banks during the
JifTiculties of war; and the community
submitted without a murmur to iheune-,
jual taxation and multiplied evils of which
tuch a course was productive. With the
war, this indulgence ceased, and the hanks
were obliged again to redeem their notes
in gold and silver. The Treasury, in accordance
with previous practice, continued
to dispense'with the currency required
by the act of 1789, and took the notes of
banks in full conlidence of their being
paid in specie on demand ; and Congress
to guard against the slightest violation of
this principle, have declared, by law, that
if notes are paid in the transactions of
the Government, it must be under each
circumstances as to enable the holder to
convert them into specie without depreciation
or delay.
Of my own duties under the existing
laws, when the banks suspended specie
payments, I could not doubt. Directions
were immediately given to prevent the
reception into the Treasury of any thing
.but gold and silver ox its equivalent; ana
every practicable arrangement was made
. to preserve the public faith, by similar or
equivalent payments to the public crcdi
tors. Th'3 revenue from lands had been
for some time substantially so cdwected,
under the order is*u?d by the directions
of iny predecessor. Th^^effects of that
order had been so ualutary/aod its foreenst
in regard to the increasing insecurity
of bank puper had become so apparent,
that, even before the catastrophe, I had
resolved not to interfere with its opera|
lion. Congiess is now to decide whether
the revenue shall continue to be so collected
or not.
The receipts into the Treasury, of bank
notet, not redeemed in specie on demand,
will not, I presume, be sanctioned. It
would destroy, without the excuse of war
or public distress, that equality of imports,
and identity of commercial regulatien,
which lie at the foundation of our Conj
federacy, and would offer to each State a
direct temptation to increase its foreign
trade, by depreciating the currency received
for duties in its ports. Such a proceeding
would also, in a great degree, frustrate
the policy, so highly cherished, of
infusing into our circulation a larger proportion
of the precious metals ; a policy,
the wisdom of which none can doubt*
(though tlieie may be different opinions as
to the extent to which it should be carried.
Its results have been already too.auspicious,
and its success is too closely interwoven
w ith the future prosperity of the
country, to permit us for a moment to
contemplate its abandonment. We have
seen, under its influence, our specie augmented
beyond eighty millions ; our coinage
increased so as to make that of gold
amount, between August, 1834 and December,
1836, to ten millions of dollars ;
exceeding the whole coinage at the mint
during the thirty-one previous years. The
prospect oi lurtner improvement continued
without abatement, until the moment
of the suspension of specie payments.
This policy has now indeed been suddenly
checked, but is still fai from being over*
thrown. Amidst all conflicting theories*
one position is undeniable : the precious
metals will invariably disappear when
there ceases to be a necessity for their
use, as a circulating medium. It was irt
strict accordance with this truth, that
whilst, in the month of May last, they
were every where seen, and were current
for all ordinary purposes, they-disappeared
from circulation the moment the payment
of specie was refused by the banks, and the
community tacitly agreed to dispense with
its employment. Their plucc was supplied
by a currency exclusively of paper,
and in many cases, of the worst description.
Already are the bank notes now in
_ i_. -i : 1 __j .?
?. ivulaiiuii jjri'ci ij urpri-viuiru, auu inev
fluctuate in value between one place and
another; thus diminishing and making
uncertain the worth of property and the
puce of labor, and failing to subserve,
except at a heavy loss, the purposes of
business. With each succeeding day the
metallic currency decreases ; by some it is
hoarded in the natural fear, that, once
parted with, it cannot be replaced ; while
by others it is diveited from its more legitimate
uses, for the 6ake of gain. Should
Congress sanction this condition of things,
by making irredeemable paper money receivable
in payment of public dues, a temporary
check to a wise and salutary polU
cy, will, in all probability, be converted
into its absolute destruction.
It is true thut bank notes actually convertible
into specie may be received in
payment of the revenue, without being
liable to all these objections, and that such
a course may, to some extent, promote
individual convenience ; an object always
to be considered where it does not conflict
with the principles of our Government
or the general welfare of the country.
If such notes only were received,
and always tinder circumstances allowing
their early piesentation for payment, and
if, at short and fixed periods, they were
converted into specie, to be kept by the
officers of the Treasury, some of the most
serious obstacles to their reception would,
perhaps, be removed. To retain the notes
in the Treasury would be to renew, under
another form, the loans of public money
to the banks,-and the evils consequent
thereon.
It is, however, a mistaken impression,
that any large amount of specie is required
for public payments. Of the seventy
or eighty millions now estimated to be in
the country, ten millions would be abun
danily sulticient lor that purpose, provided
an accumulation of a large amount of revenue,
beyond the necessary wanis of the
Government, be hereafter prevented. If
to these considerations be added the facilities
which will arise from enabling tho
Treasury to satisfy the public creditors,
by its drafts or notes received in payment
of the public dues, it may be safely assumed
that no motive of convenience to
the citizen requires the reception of bank
paper.
To say that the refusal of paper money
by the Government, introduces an unjust
discrimination between the currency received
by it, and that used by individuals