The Senator from California [Mr. Casserly] has read to you the clause. We have been reminded to-day by a Senator on this floor that these are formal words, words that often appear in statutes. But are they not significant words? Have they not a meaning? Why are they there? Because they have a meaning; because they reserve to Congress what I call plenary power over the whole system. That system may be readjusted, modified, shaped anew, and the banks cannot complain. They began their existence under that law; they knew the conditions of their being; and they cannot now murmur, if Congress chooses to exercise the prerogative which it reserved at the very inception of the whole system.
Sir, I approach this question, therefore, with the conviction that the whole matter is open to our discretion. Nobody can say safely that what is now proposed is not within the power of Congress. Congress may do it, if the occasion justifies, if in its discretion it thinks best to do it. It may do it, if it thinks that the financial policy of this country will be thereby promoted. The banks are all parties to that policy. May not the country turn around and ask the banks to do their part in this great work of renovation? To a certain extent the banks are in partnership with the Government. May not the Government insist that they shall do their part on this great occasion? Shall this effort of ours to readjust our finances and to save this large interest to our country be thwarted by a pretension on the part of the banks that we have not the power to interfere?
But we are reminded that there is a difference between power and right. How often, Sir, on other occasions, have I so insisted in this Chamber! A great, broad, vital distinction there always is between power and right. A nation or an individual may have a power without right. Now is there not here a right as well as a power? I cannot doubt it. I cannot doubt that Congress may rightfully exercise what I cannot doubt is an existing power. Why should it not? It could exercise it—who can doubt?—with reference to the public interests, to promote the national credit. It will not exercise it in any spirit of wantonness, in any spirit of injustice,—but to promote the national credit. Is not that a rightful object? No one will say the contrary. Why, then, shall we hesitate?
We are reminded that these banks have secured certain privileges, and it is said often that those are vested, and the old phrase “vested rights” has been repeated. But how can they have vested rights under a statute which contains the provision just read to us, securing to Congress full power to change it in every respect? What, then, is the simple aspect of this question? It is that certain securities have been lodged with the Government by these banks on which they transact their business, and now in readjusting the national debt it is deemed advisable and for the public interests that the securities should be at a lower rate of interest than when they were originally deposited. Is it not right for Congress to require that? I cannot see the wrong in it. I cannot see any doubt on the question. To my mind it is clear; it is absolutely within the province of Congress, in the exercise of the discretion which it originally retained over this whole subject.
I hope, therefore, that in this debate we shall not be pressed too much with the suggestion that we cannot coerce these banks. If the occasion requires, and if the term be applicable, then do I say we may coerce these banks to the extent of obliging them to take these securities at a reduced rate of interest. I find no Repudiation in that. I find nothing wrong in that. I find nothing in it but a simple measure in harmony with this great process of Financial Reconstruction in which we are now engaged. I call it Financial Reconstruction; and in this work ought not the banks to take their place and perform their part?
Now, Sir, I have a criticism on this section. It does not go far enough. The Committee propose that the banks shall take one third of the three different kinds of bonds, the five, the four and a half, and the four per cents. I think they ought to be required to take all in fours, and I propose to give the Senate an opportunity of expressing its judgment on that proposition. I may be voted down; perhaps I shall be; but I shall make a motion, in the honest endeavor to render this bill a practical measure, which can best succeed. I wish to mature it; I wish to put it in the best shape possible; and for the sake of the banks, and in the interest of the banks, I wish such a measure as shall have a reasonable chance of stability in the future. If you allow the banks gains that are too large, there will necessarily be a constant opposition, growing and developing as their gains become more conspicuous. Why expose the system to any such criticism? Let us now revise it carefully, place it on sure, but moderate foundations, so that it will have in itself the elements of future stability.
To my mind that is the more politic course, and I am sure it is not unjust. You and I, Mr. President, remember very well what was done on another occasion. The State banks were taxed out of existence. It was the cry, “Tax them out of existence! do not let them live! drive them from competition with these new children of ours, the national banks!” It was done. Was not that coercion? If the phrase is to be employed, there was an occasion for it. But I am not aware that it was argued, certainly it was with no great confidence argued, that to do that was unjust. It was a measure of policy wisely adopted at the time, and which we all now see has answered well. But if we could tax the State banks out of existence, can we not, under the very specific terms of the Act of Congress to which these national banks owe their existence, apply a rule not unlike to them? We do not propose to tax them out of existence, but we propose to require that they shall lodge with the Government securities at a lower rate of interest.
Something has been said, perhaps much, in this debate, with regard to the burden that this will impose upon the banks. The Senator from Ohio [Mr. Sherman] has already answered that objection, and I do not know that I can add to his answer; and yet I am not aware that he reminded the Senate that in this very bill there is a new and important provision in favor of the banks, or in favor of all bondholders,—being an exemption from all taxation, not only State and municipal, but national.
There is but one other remark I will make, and that is, we all know, unless I am much deceived, that the banks have during these last years made great profits. I am told that the profits of the national banks are two or three times greater than those of the old State banks, which we did not hesitate to tax out of existence. Now is not that a fact in this case? Is it not an essential element? Should it not be taken into consideration on this occasion? If these national banks are the recipients of such large profits, should we not exercise all the power that belongs to us to compel them to their full contribution to this great measure of Financial Reconstruction? I cannot hesitate in my conclusion.