In 1745, the alarm occasioned by the advance of the Highlanders, under the Pretender, as far as Derby, led to a run upon the Bank of England; and in order to gain time, the directors, while continuing to pay in specie, adopted the device of paying in shillings and sixpences. But, next to the retreat of the enemy, their best relief was found in a resolution by the merchants and traders of the city, declaring their willingness to receive bank-notes in payment of any sum due, and pledging their utmost endeavors to make all payments in these bank-notes. This proceeding, it is perceived, was prompted by the pressure of civil disturbance. But the most authentic case is that of 1797, when the Bank, under pressure of political events, was prohibited, by Order in Council, issued on Sunday, the 26th of February, from paying their notes in cash, until the sense of Parliament should be taken on the subject. At the meeting of Parliament, after much discussion, it was agreed to continue the suspension till six months after the signature of a definitive treaty of peace, thus positively recognizing the existence of war as a reason for this departure from principle. A recent English writer vindicates this act as follows.
“Much difference of opinion has existed with respect to the policy of the restriction in 1797; but, considering the peculiar circumstances under which it took place, its expediency seems abundantly obvious. The run did not originate in any over-issue of bank paper, but grew entirely out of political causes. So long as the alarms of invasion continued, it was clear that no bank paper immediately convertible into gold would remain in circulation. And as the Bank, though possessed of ample funds, was without the means of instantly retiring her notes, she might, but for the interference of Government, have been obliged to stop payments,—an event, which, had it occurred, might have produced consequences fatal to the public interests. The error of the Government did not consist in their coming to the assistance of the Bank, but in continuing the restriction after the alarm of invasion had ceased, and there was nothing to hinder the Bank from safely reverting to specie payments.”[194]
Unhappily, the definitive treaty of peace, on which the restoration of specie payments depended, was not consummated till 1815, so that throughout this long period there was an inconvertible currency, which even the sanction of Parliament did not save, in 1814, from a discount of twenty-five per cent. But peace did not bring specie at once. The routine of paper had become too strongly fixed, and it was only through the remarkable efforts of Sir Robert Peel, in 1819, that an Act of Parliament was passed requiring the payment of specie at the Bank in 1823. Such is the practical testimony of British experience.
The experience of France is similar. I do not now refer to the old assignats, but to a modern instance. Beyond question, the Bank of France is conducted with caution and skill; but no caution and skill are adequate to counteract the influence of a sudden revolution, especially like that of 1848, when the Republic was declared. The Bank made large advances to the Provisional Government. This obligation, combined with distrust universally prevalent, occasioned so severe a drain of gold, that, to prevent the total exhaustion of its vaults, the Bank was authorized by Government decree of 16th March, 1848,—just three weeks after the Revolution,—to suspend specie payments, while its notes were at the same time made a legal tender. To prevent abuse, possible in such a condition of things, a maximum of issues was fixed at three hundred and fifty million francs. Such precautions were proper; but the fact of the authorized suspension remains an example of history. The prompt return to the true system is not without encouragement.
If these instances are entitled to consideration, they seem to show, that, according to the experience of other countries, Government may be compelled at times to relax the rigor of its requirements with regard to convertible paper. But they do not fix the limitation to the exercise of this extraordinary discretion. That the discretion exists is important in the present debate.
It is a discretion kindred to that under which the Habeas Corpus is suspended, so that citizens are arrested without the forms of law,—kindred to that under which an extensive territory is declared to be in a condition of insurrection, so that all business with its inhabitants is suspended,—kindred to that which unquestionably exists, to obtain soldiers, if necessary, by draft or conscription instead of the free offering of volunteers,—kindred to that under which private property is taken for public uses,—and kindred, also, to that undoubted discretion which sanctions the completest exercise of the transcendent right of self-defence.
But, while recognizing the existence of the discretion in the last resort, under the law of necessity, the question still remains if this necessity actually exists. And now, as I close, I shall not cease to be frank. Is it necessary to incur all the unquestionable evils of inconvertible paper, forced into circulation by Act of Congress,—to suffer the stain upon our national faith, to bear the stigma of a seeming repudiation, to lose for the present that credit which in itself is a treasury, and to teach debtors everywhere that contracts may be varied at the will of the stronger? Surely there is much in these inquiries to make us pause. If our country were poor or feeble, without population and without resources, if it were already drained by a long war, if the enemy had succeeded in depriving us of the means of livelihood, then we should not even pause. But our country is rich and powerful, with a numerous population, busy, honest, and determined, abounding in unparalleled resources of all kinds, agricultural, mineral, industrial, and commercial; it is yet undrained by the war in which we are engaged, nor has the enemy succeeded in depriving us of any means of livelihood. It is hard, very hard, to think that such a country, so powerful, so rich, and so beloved, should be compelled to adopt a policy of even questionable propriety.
If I mention these things, if I make these inquiries, it is because of the unfeigned solicitude which I feel with regard to this measure, and not with the view of arguing against the exercise of a constitutional power, when, in the opinion of the Government to which I give my confidence, the necessity for its exercise has arrived. Surely we must all be against paper money, we must all insist upon maintaining the integrity of the Government, and we must all set our faces against any proposition like the present, except as a temporary expedient, rendered imperative by the exigency of the hour. If it has my vote, it will be only because I am unwilling to refuse the Government especially charged with this responsibility that confidence which is hardly less important to the public interests than the money itself. Others may doubt if the exigency is sufficiently imperative; but the Secretary of the Treasury, whose duty it is to understand the occasion, does not doubt. In his opinion the war requires this sacrifice. Uncontrollable passions are let loose to overturn the tranquil conditions of peace. Meanwhile your soldiers in the field must be paid and fed. There can be no failure or postponement. A remedy is proposed which at another moment you would reject. Whatever the national resources, they are not now within reach, except by summary process. Reluctantly, painfully, I consent that the process shall issue.
And yet I cannot give such a vote without warning the Government against the dangers from such an experiment. The medicine of the Constitution must not become its daily bread. Nor can I disguise the conviction that better than any device of legal tender will be vigorous, earnest efforts for the suppression of the Rebellion, and the establishment of the Constitution in its true principles over the territory which the Rebellion has usurped.