Mr. Buchanan. Although the proposition was limited to the first of August, the Senators themselves upon reflection, thought it so improper that they abandoned it, and we have heard nothing of it since.
What would have been the condition of the country, at the present moment, had we received irredeemable bank notes in payments of the public dues? The banks, by our conduct, would have been encouraged to increase their discounts and expand their issues, and we should have gone from bad to worse, until, at this moment, we should have had no prospect of the resumption of specie payments. Mr. Cheves has informed us that if the Government had not stood firm in 1819 against the receipt of irredeemable notes, the banks would at that period have suspended. Much more necessary is it that we should now maintain the same ground, in order to secure a resumption. Had we pursued any other course, it is true we should have but one currency for the Government and the people; but it would have been currency of irredeemable bank rags, without the hope of a better. And yet the Bank of the United States complains that the Government does not receive such paper. In order to have done so, we must have repealed the existing laws upon the subject; and who has ventured to propose any such measure?
The Bank of the United States has succeeded, at the late bank convention in New York, in keeping its forces behind their cotton bales. The banks of only two States in the Union have voted against the resolution to suspend the resumption of specie payments until the first day of January next. These were New York and Mississippi; and whether the latter voted thus because their banks are ready now to resume, or desired to postpone resumption until a still more distant day, I shall not pretend to determine. After this display of power, no one will question the ability of the bank to keep its forces behind their entrenchments, unless they should be driven into the plain by the resistless power of public opinion.
Several weeks ago I attempted to imitate the illustrious examples which had been set before me on this floor, and became a political prophet. I then predicted that, before the close of the present year, commerce and manufactures would revive and flourish, and the country would be restored to its former prosperity. The signs of the times have already confirmed the truth of this prophecy. Encouraged by past experience, I shall venture to make another prediction: There is not a sound and solvent bank in any of the Atlantic States of this Union, including the Bank of the United States, which will not have resumed specie payments long before the first of January. All the opposition of the banks themselves cannot prevent this result. In the very nature of things it must come to pass. The power of public opinion is yet still greater in this country than that of the banks. The Bank of the United States will not be able to keep its forces behind their cotton bags until so late a period.
It is now too late in the day for us any longer to doubt what was the cause of the suspension of specie payments. That question has been settled on the other side as well as on this side of the Atlantic. Abundance of light has been shed upon this subject, and no two sound-judging men, at all acquainted with the facts, can arrive at different conclusions. It has already become history. And yet the bank, in its manifesto, has not once alluded to this cause. What was it? In the perpetual fluctuations which must ever be produced by our present banking system, unless it should be regulated by State legislation, of which I now almost despair, it was expanded in the commencement of the year 1837 almost to the point of explosion. The bubble is created, it expands, and reflects the most brilliant colors. Its admirers gaze upon it with hope and ecstasy, when, suddenly, it bursts, and leaves them in ruin and despair. Such has been the history of the past, and such will be that of the future. This expansion had produced, as it must ever produce, enormous speculation and over-trading. The commercial debt which we then owed to England for foreign merchandise was immense. We must have suffered the fatal collapse sooner or later, but a circumstance then occurred in England which at once produced the explosion. It was the spark applied to the magazine of gunpowder.
A similar state of expansion then existed in England. They were threatened with similar evils from extravagant bank credits, and their inevitable consequence—enormous speculation and over-trading. The Bank of England had in vain attempted to control the joint-stock banks, and confine them within reasonable limits. She at last became alarmed for her own safety. In the beginning of 1837 her stock of specie was reduced to about four millions of pounds sterling, or one-sixth of her circulation and deposits. This was not more than one-half of the proportion which, it is believed, she ought to have in order to render her secure. The state of the foreign exchanges was gradually withdrawing the remaining bullion from her vaults. At this crisis, under the influence of a panic, she withdrew her credits from the American houses in England, and ruined them. The price of cotton, in consequence, suddenly fell from nineteen and twenty cents to seven and eight cents per pound; and thus, according to the best and most discreet estimate which I have seen, we lost at least thirty million of dollars. The sum was thus, as it were in a single moment, abstracted from our means of paying the immense commercial balance against us. At the close of this disastrous operation, that balance was estimated at forty millions of dollars. What was the immediate consequence? A drain of specie then commenced from our banks for exportation, in order to pay this debt, and they were thus compelled to suspend or be ruined. Another circumstance existed to increase our embarrassments. Our merchants had drawn heavy bills upon England, predicated upon the cotton which they had shipped there, expecting to receive the old prices. In consequence of the sudden fall of prices, these bills were dishonored, and came back protested. Thus many of our largest mercantile houses were ruined.
The catastrophe proceeded from the same causes, and was similar in both countries, except that in England the banks were not compelled to suspend specie payments. The revenue of both has been insufficient to meet the current expenses of the Government, and each will be obliged to borrow nearly the same sum to supply the deficiency.
This is now history, which can neither be changed nor perverted. On both sides of the Atlantic all men of business and practical statesmen have come to the same conclusion. Away, then, with your Specie Circular, your mismanagement of the deposits, and your clamor raised by the executive against bank notes, as the causes of the suspension of specie payments. The bank calculates too much upon the political credulity of the people, when, at this late day, after the subject is perfectly understood, it attempts to palm off upon them such exploded reasons for the suspension. A convulsion which has shaken the commercial world to its centre, and has extended over three-quarters of the globe, could never spring from such trivial causes.
If the executive has been carrying on a war against the credit system of the country, and in favor of an exclusive metallic currency for the people of the United States, I am ignorant of the fact. I have never even suspected it. I believe this is a mere phantom which has been conjured up to alarm the fears of the timid. If the President ever should wage any such war, I shall not fight under his banner. The only pretext upon which this charge has been founded is, that he and his political friends desire to separate the business of the Treasury from that of the banks, not to render them hostile to each other. Until that propitious day shall arrive, we shall be forever agitated by the connection of the currency with our miserable party politics. Political panics, political pressures, charges against the Government for exercising an improper influence over the banks, and charges against the banks for interfering with the politics of the country; all, all which have kept us in a state of constant agitation for the last seven years will continue to exist, and will be brought into action upon every successive election for President and Vice President. We shall thus continue in a state of perpetual commotion; and the great interests of the country will be sacrificed. Let the Treasury and the banks part in peace, and whilst they are mutually independent, let them wage no war against each other; and I solemnly believe it would be the greatest blessing which could be conferred upon both parties. To this extent, I should go with the President if I had the power; but when I determine to obey instructions, I shall do it honestly and fairly. I shall, therefore, say no more on this subject.
It is true that at the special session I did endeavor to prove that the present banking system, under its existing regulations, was one of the very worst which the art of man could devise. Under it, ruinous expansions and revulsions must continue to succeed each other at stated periods, and many of the best and most enterprising men of the country must become its victims. I then expressed a hope, not unmingled with fear, that the State legislatures at their next session might impose wholesome restrictions upon their banking institutions—restrictions which would prove equally advantageous to the banks and the people. These legislatures have all now risen without prescribing any such regulations, and we are destined again and again to pass through the same vicissitudes which we have so often already witnessed.