[CHAPTER LXXIV.]
RECHARTER OF THE DISTRICT BANKS: MR. BENTON'S SPEECH: EXTRACTS.
Mr. Benton then proposed the following amendment:
"And be it further enacted, That each and every of said banks be, and they are hereby, expressly prohibited from issuing or paying out, under any pretence whatever, any bill, note, or other paper, designed or intended to be used and circulated as money, of a less denomination than five dollars, or of any denomination between five and ten dollars, after one year from the passage of this bill; or between ten and twenty dollars, after two years from the same time; and for any violation of the provisions of this section, or for issuing or paying out the notes of any bank in a state of suspension, its own inclusive, the offending bank shall incur all the penalties and forfeitures to be provided and directed by the first section of this act for the case of suspension or refusal to pay in specie; to be enforced in like manner as is directed by that section."
Mr. Benton. The design of the amendment is to suppress two great evils in our banking system: the evil of small notes, and that of banks combining to sustain each other in a state of suspension. Small notes are a curse in themselves to honest, respectable banks, and lead to their embarrassment, whether issued by themselves or others. They go into hands of laboring people, and become greatly diffused, and give rise to panics; and when a panic is raised it cannot be stopped among the holders of these small notes. Their multitudinous holders cannot go into the counting-room to examine assets, and ascertain an ultimate ability. They rush to the counter, and demand pay. They assemble in crowds, and spread alarm. When started, the alarm becomes contagious—makes a run upon all banks; and overturns the good as well as the bad. Small notes are a curse to all good banks. They are the cause of suspensions. When the Bank of England commenced operations, she issued no notes of a less denomination than one hundred pounds sterling; and when the notes were paid into the Bank, they were cancelled and destroyed. But in the course of one hundred and three years, she worked down from one hundred pound notes to one pound notes. And when did they commence reducing the amount of their notes? During the administration of Sir Robert Walpole. When the notes got down to one pound, specie was driven from circulation, and went to France and Holland, and a suspension of six and twenty years followed.
They are a curse to all good banks in another way: they banish gold and silver from the country: and when that is banished the foundation which supports the bank is removed: and the bank itself must come tumbling down. While there is gold and silver in the country—in common circulation—banks will be but little called upon for it: and if pressed can get assistance from their customers. But when it is banished the country, they alone are called upon, and get no help if hard run. All good banks should be against small notes on their own account.
These small notes are a curse to the public. They are the great source of counterfeiting. Look at any price current, and behold the catalogue of the counterfeits. They are almost all on the small denominations—under twenty dollars. And this counterfeiting, besides being a crime in itself, leads to crimes—to a general demoralization in passing them. Holders cannot afford to lose them: they cannot trace out the person from whom they got them. They gave value for them; and pass them to somebody—generally the most meritorious and least able to bear the loss—the day-laborer. Finally, they stop in somebody's hands—generally in the hands of a working man or woman.
Why are banks so fond of issuing these small notes? Why, in the first place, banks of high character are against them: it is only the predatory class that are for them: and, unfortunately, they are a numerous progeny. It is in vain they say they issue them for public accommodation. The public would be much better accommodated with silver dollars, gold dollars—with half, whole, double, and quarter eagles—whereof they would have enough if these predatory notes were suppressed. No! they are issued for profit—for dishonest profit—for the shameful and criminal purpose of getting something for nothing. It is for the wear and tear of these little pilfering messengers! for their loss in the hands of somebody! which loss is the banker's gain! the gain of a day's or a week's work from a poor man, or woman, for nothing. Shame on such a spirit, and criminal punishment on it besides. But although the gains are small individually, and in the petty larceny spirit, yet the aggregate is great; and enters into the regular calculation of profit in these paper money machines; and counts in the end. There is always a large per centum of these notes outstanding—never to come back. When, at the end of twenty-five years, Parliament repealed the privilege granted to the Bank of England to issue notes under five pounds, a large amount were outstanding; and though the repeal took place more than twenty years ago, yet every quarterly return of the Bank now shows that millions of these notes are still outstanding, which are lost or destroyed, and never will be presented. The Bank of England does not now issue any note under five pounds sterling: nor any other bank in England. The large banks repulsed the privilege for themselves, and got it denied to all the small class. To carry the iniquity of these pillaging little notes to the highest point, and to make them open swindlers, is to issue them at one place, redeemable at another. That is to double the cheat—to multiply the chance of losing the little plunderer by sending him abroad, and to get a chance of "shaving" him in if he does not go.
The statistics of crime in Great Britain show, that of all the counterfeiting of bank bills and paper securities in that kingdom, more is counterfeited on notes under five pounds than over and it is the same in this country. On whom does the loss of these counterfeit notes fall? On the poor and the ignorant—the laborer and the mechanic. Hence these banks inflict a double injury on the poorer classes; and of all the evils of the banking system, the most revolting is its imposing unequal burdens on that portion of the people the least able to bear them.