Under this system, what will be the fate of your private merchants? This practice must be arrested, or they must all be ruined. The one or the other alternative is inevitable. What private individual can enter the cotton market in competition with the banks of the country? Individual enterprise can accomplish nothing in such a struggle. It would be the spear hurled by the feeble hand of the aged Priam, which scarce reached the buckler of the son of Achilles. The Bank of the United States which, according to the testimony of its president, might have destroyed, by an exertion of its power, almost every bank in the country, could, with much greater ease, destroy any private merchant who might dare to interfere with its speculations. Such a contest would be that of Hercules contending against an infant. It can acquire a monopoly against individual merchants in any branch of mercantile business in which it may engage; and, after having prostrated all competition, it can then regulate the price of any article of commerce according to its pleasure. I do not say that such is either its wish or its intention; but I mean thus to illustrate the vast and dangerous power which it may exercise as a merchant. The East India company monopolized the trade of Asia, but it possessed no banking powers. It could not, therefore, by curtailing or expanding its issues, make money scarce or make money plenty at pleasure, and thereby raise or depress the price of the articles in which it traded. In this respect its power as a merchant was inferior to that now exercised by the Bank of the United States.
How vain, then, I might almost say how ridiculous, is it for people of the South to make the attempt to establish merchants in the southern seaports for the purpose of conducting a direct trade with Europe in cotton and other articles of their production, in opposition to the Bank of the United States and their own local banks. This effort must fail, or the banks must cease to be merchants. I am glad to learn that, at the late Southern convention, this alarming usurpation by the banks of the appropriate business of the merchant has been viewed in its proper light. The time, I trust, is not far distant when they will be confined, by public opinion, to their appropriate sphere. What a fatal error it is for any free people, tempted by present and partial gain, to encourage and foster such institutions in a course which must, if pursued, inevitably crush the merchants of the country who conduct its foreign trade! As a class, these merchants are highly meritorious, and entitled to our support and protection against a power which, if suffered to be exerted, must inevitably destroy them.
Philadelphia is a city devoted to the interests of the bank; but even in that city, if it should undertake to speculate in flour, in coal, or in any other article which is poured into her market from the rich abundance of the State, such conduct would not be submitted to for a moment. The legislature of the State would at once interpose to protect our merchants. Such an attempt would at once break the spell of bank influence. And yet it possesses no more power to deal in southern cotton than it does in Pennsylvania flour. It will remain a banker at home; whilst its mercantile speculations will be confined to the southern and southwestern provinces of its empire.
The reason will now, I think, appear manifest why the Parliament of Great Britain, the Congress of the United States, and the Legislature of Pennsylvania, have so strictly prohibited their banking institutions from dealing in any thing except bills of exchange and gold and silver bullion. If the Bank of England should dare to invade the province of the merchants and manufacturers of that country in a similar manner, the attempt would instantly be put down. Every man acquainted with the history and character of the people of England, knows that such would be the inevitable consequence. And yet this violation of law, on the part of the Bank of the United States, has been lauded in our free Republic.
As I am upon the floor, I shall proceed briefly to discuss the merits of the bill now before the Senate. It proposes to inflict a fine not exceeding ten thousand dollars, or imprisonment not less than one nor more than five years, or both such fine and imprisonment, at the discretion of the court, upon those who shall be convicted under its provisions. Against whom does it denounce these penalties? Against directors, officers, trustees, or agents of any corporation created by Congress, who, after its term of existence is ended, shall reissue the dead notes of the defunct corporation, and push them into the circulation of the country, in violation of its original charter. The bill embraces no person, acts upon no person, interferes with no person, except those whose duty it is, under the charter of the old bank, to redeem and cancel the old notes as they are presented for payment, and who, in violation of this duty, send them again into circulation.
This bill inflicts severe penalties, and, before we pass it, we ought to be entirely satisfied, first, that the guilt of the individuals who shall violate its provisions is sufficiently aggravated to justify the punishment; second, that the law will be politic in itself; and, third, that we possess the constitutional power to enact it.
First, then, as to the nature and aggravation of the offence. The charter of the late Bank of the United States expired, by its own limitation, on the 3d of March, 1836. After that day, it could issue no notes, discount no new paper, and exercise none of the usual functions of a bank. For two years thereafter, until the 3d of March, 1838, it was merely permitted to use its corporate name and capacity “for the purpose of suits for the final settlement and liquidation of the affairs and accounts of the corporation, and for the sale and disposition of their estate, real, personal, and mixed; but not for any other purpose, or in any other manner, whatsoever.” Congress had granted the bank no power to make a voluntary assignment of its property to any corporation or any individual. On the contrary, the plain meaning of the charter was, that all the affairs of the institution should be wound up by its own president and directors. It received no authority to delegate this important trust to others; and yet what has it done? On the 2d day of March, 1836, one day before the charter had expired, this very president and these directors assigned all the property and effects of the old corporation to the Pennsylvania Bank of the United States. On this same day, this latter bank accepted the assignment, and agreed to “pay, satisfy and discharge all debts, contracts, and engagements, owing, entered into, or made by this [the old] bank, as the same shall become due and payable, and fulfil and execute all trusts and obligations whatsoever arising from its transactions, or from any of them, so that every creditor or rightful claimant shall be fully satisfied.” By its own agreement, it has thus expressly created itself a trustee of the old bank. But this was not necessary to confer upon it that character. By the bare act of accepting the assignment, it became responsible, under the laws of the land, for the performance of all the duties and trusts required by the old charter. Under the circumstances, it cannot make the slightest pretence of want of notice.
Having assumed this responsibility, the duty of the new bank was so plain that it could not have been mistaken. It had a double character to sustain. Under the charter from Pennsylvania, it became a new banking corporation; whilst, under the assignment from the old bank, it became a trustee to wind up the concerns of that institution. These two characters were in their nature separate and distinct, and never ought to have been blended. For each of these purposes it ought to have kept a separate set of books. Above all, as the privilege of circulating bank notes, and thus creating a paper currency, is that function of a bank which most deeply and vitally affects the community, the new bank ought to have canceled or destroyed all the notes of the old bank which it found in its possession on the 4th of March, 1836, and ought to have redeemed the remainder, at its counter, as they were demanded by the holders, and then destroyed them. This obligation no Senator has attempted to doubt, or to deny. But what was the course of the bank? It has grossly violated both the old and the new charter. It at once declared independence of both, and appropriated to itself all the notes of the old bank, not only those which were then still in circulation, but those which had been redeemed before it accepted the assignment, and were then lying dead in its vaults. I have now before me the first monthly statement which was ever made by the bank to the auditor general of Pennsylvania. It is dated on the 2d of April, 1836, and signed J. Cowperthwaite, acting cashier. In this statement the bank charges itself with “notes issued,” $36,620,420.16; whilst in its cash account, along with its specie and the notes of State banks, it credits itself with “notes of the Bank of the United States and offices,” on hand, $16,794,713.71. It thus seized these dead notes to the amount of $16,794,713.71, and transferred them into cash; whilst the difference between those on hand and those issued, equal to $19,854,706.45, was the circulation which the new bank boasted it had inherited from the old. It thus, in an instant, appropriated to itself, and adopted as its own circulation, all the notes and all the illegal branch drafts of the old bank which were then in existence. Its boldness was equal to its utter disregard of law. In this first return, it not only proclaimed to the legislature and people of Pennsylvania that it had disregarded its trust as assignee of the old bank, by seizing upon the whole of the old circulation and converting it to its own use, but that it had violated one of the fundamental provisions of its new charter.
In Pennsylvania we have, for many years past, deemed it wise to increase the specie basis of our paper circulation. We know that, under the universal law of currency, small notes and gold and silver coin of the same denomination cannot circulate together. The one will expel the other. Accordingly, it is now long since we prohibited our banks from issuing notes of a less denomination than five dollars. The legislature which rechartered the Bank of the United States, deemed it wise to proceed one step further in regard to this mammoth institution; and in that opinion I entirely concur. Accordingly, by the sixth fundamental article of its charter, they declare that “the notes and bills which shall be issued by order of said corporation, or under its authority, shall be binding upon it; and those made payable to order shall be assignable by endorsement, but none shall be issued of a denomination less than ten dollars.”
Now, it is well known to every Senator within the sound of my voice, that a large proportion of these resurrection notes, as they have been aptly called, which have been issued and reissued by order of the new bank, are of the denomination of five dollars. Here, then, is a plain, palpable violation, not only of the spirit, but of the very letter of its charter. The Senate will perceive that the bank, as if to meet the very case, is not merely prohibited from issuing its own notes, signed by its own president and cashier, of a denomination less than ten dollars, but this prohibition is extended to the notes or bills which shall be issued by its order, or under its authority. If I should even be mistaken in this construction of the law, and I believe I am not, it would only follow that its conduct has not amounted to a legal forfeiture of its charter. In both cases the violation of the spirit of its charter, and the contravention of the wise policy of the legislature, are equally glaring. So entirely did the bank make these dead notes its own peculiar circulation, that until July last, in its monthly returns to the Auditor General of Pennsylvania, the new and the old notes are blended together, without any distinction. In that return we were, for the first time, officially informed that the bank had ever issued any notes of its own.