2. The pre-emptive system. The provisions of the bill were simple, being merely to secure the privilege of first purchase to the settler on any lands to which the Indian title had been extinguished; to be paid for at the minimum price of the public lands at the time. A senator from Maryland, Mr. Merrick, moved to amend the bill by confining its benefits to citizens of the United States—excluding unnaturalized foreigners. Mr. Benton opposed this motion, in a brief speech.
"He was entirely opposed to the amendment of the senator from Maryland (Mr. Merrick). It proposed something new in our legislation. It proposed to make a distinction between aliens and citizens in the acquisition of property. Pre-emption rights had been granted since the formation of the government; and no distinction, until now, had been proposed, between the persons, or classes of persons, to whom they were granted. No law had yet excluded aliens from the acquisition of a pre-emption right, and he was entirely opposed to commencing a system of legislation which was to affect the property rights of the aliens who came to our country to make it their home. Political rights rested on a different basis. They involved the management of the government, and it was right that foreigners should undergo the process of naturalization before they acquired the right of sharing in the government. But the acquisition of property was another affair. It was a private and personal affair. It involved no question but that of the subsistence, the support, and the comfortable living of the alien and his family. Mr. B. would be against the principle of the proposed amendment in any case, but he was particularly opposed to this case. Who were the aliens whom it proposed to affect? Not those who are described as paupers and criminals, infesting the purlieus of the cities, but those who had gone to the remote new States, and to the remote parts of those States, and into the depths of the wilderness, and there commenced the cultivation of the earth. These were the description of aliens to be affected; and if the amendment was adopted, they would be excluded from a pre-emption right in the soil they were cultivating, and made to wait until they were naturalized. The senator from Maryland (Mr. Merrick), treats this as a case of bounty. He treats the pre-emption right as a bounty from the government, and says that aliens have no right to this bounty. But, is this correct? Is the pre-emption a bounty? Far from it. In point of money, the pre-emptioner pays about as much as any other purchaser. He pays the government price, one dollar and twenty-five cents; and the table of land sales proves that nobody pays any more, or so little more that it is nothing in a national point of view. One dollar twenty-seven and a half cents per acre is the average of all the sales for fifteen years. The twenty millions of acres sold to speculators in the year 1836, all went at one dollar and twenty-five cents per acre. The pre-emption then is not a bounty, but a sale, and a sale for full price, and, what is more, for solid money; for pre-emptioners pay with gold and silver, and not with bank credits. Numerous were the emigrants from Germany, France, Ireland, and other countries, now in the West, and especially in Missouri, and he (Mr. B.) had no idea of imposing any legal disability upon them in the acquisition of property. He wished them all well. If any of them had settled upon the public lands, so much the better. It was an evidence of their intention to become citizens, and their labor upon the soil would add to its product and to the national wealth."
The motion of Mr. Merrick was rejected by a majority of 13. The yeas were: Messrs. Bayard, Clay of Kentucky, Clayton, Crittenden, Davis, Knight, Merrick, Prentiss, Preston, Rives, Robbins, Smith, of Indiana, Southard, Spence, Tallmadge, Tipton, 15. The nays were: Messrs. Allen, Benton, Brown, Buchanan, Calhoun, Clay, of Alabama, Cuthbert, Fulton, Grundy, Hubbard, King, Linn, Lumpkin, Lyon, Mouton, Nicholas, Niles, Nowell, Pierce, Roane, Robinson, Sevier, Walker, Webster, White, Williams, Wright, Young, of Illinois, (28.) The bill being then put to the vote, was passed by a majority of 14.
3. Taxation of public lands when sold. When the United States first instituted their land system, the sales were upon credit, at a minimum price of two dollars, payable in four equal annual payments, with a liability to revert if there should be any failure in the payments. During that time it was considered as public land, nor was the title passed until the patent issued—which might be a year longer. Five years, therefore, was the period fixed, during which the land so sold should be exempt from taxation by the State in which it lay. This continued to be the mode of sale, until the year 1821, when the credit was changed for the cash system, and the minimum price reduced to one dollar twenty-five cents per acre. The reason for the five years exemption from state taxation had then ceased, but the compacts remaining unaltered, the exemption continued. Repeated applications were made to Congress to consent to the modification of the compacts in that article; but always in vain. At this session the application was renewed on the part of the new States; and with success in the Senate, where the bill for that purpose passed nearly unanimously, the negatives being but four, to wit: Messrs. Brown, Clay of Kentucky, Clayton, Southard. Being sent to the H. R. it remained there without action till the end of the session.
[CHAPTER XXXI.]
SPECIE BASIS FOR BANKS: ONE THIRD OF THE AMOUNT OF LIABILITIES THE LOWEST SAFE PROPORTION: SPEECH OF MR. BENTON ON THE RECHARTER OF THE DISTRICT BANKS.
This is a point of great moment—one on which the public mind has not been sufficiently awakened in this country, though well understood and duly valued in England. The charters of banks in the United States are usually drawn on this principle, that a certain proportion of the capital, and sometimes the whole of it, shall be paid up in gold or silver before the charter shall take effect. This is the usual provision, without any obligation on the bank to retain any part of this specie after it gets into operation; and this provision has too often proved to be illusory and deceptive. In many cases, the banks have borrowed the requisite amount for a day, and then returned it; in many other cases, the proportion of specie, though paid up in good faith, is immediately lent out, or parted with. The result to the public is about the same in both cases; the bank has little or no specie, and its place is supplied by the notes of other banks. The great vice of the banking system in the United States is in banking upon paper—upon the paper of each other—and treating this paper as cash. This may be safe among the banks themselves; it may enable them to settle with one another, and to liquidate reciprocal balances; but to the public it is nothing. In the event of a run upon a bank, or a general run upon all banks, it is specie, and not paper, that is wanted. It is specie, and not paper, which the public want, and must have.
The motion of the senator from Pennsylvania [Mr. Buchanan] is intended to remedy this vice in these District banks; it is intended to impose an obligation on these banks to keep in their vaults a quantum of specie bearing a certain proportion to the amount of their immediate liabilities in circulation and deposits. The gentleman's motion is well intended, but it is defective in two particulars: first, in requiring the proportion to be the one-fourth, instead of the one-third, and next, in making it apply to the private deposits only. The true proportion is one-third, and this to apply to all the circulation and deposits, except those which are special. This proportion has been fixed for a hundred years at the Bank of England; and just so often as that bank has fallen below this proportion, mischief has occurred. This is the sworn opinion of the present Governor of the Bank of England, and of the directors of that institution. Before Lord Althorpe's committee in 1832, Mr. Horsley Palmer, the Governor of the Bank, testified in these words:
"'The average proportion, as already observed, of coin and bullion which the bank thinks it prudent to keep on hand, is at the rate of a third of the total amount of all her liabilities, including deposits as well as issues.' Mr. George Ward Norman, a director of the bank, states the same thing in a different form of words. He says: 'For a full state of the circulation and the deposits, say twenty-one millions of notes and six millions of deposits, making in the whole twenty-seven millions of liabilities, the proper sum in coin and bullion for the bank to retain is nine millions.' Thus, the average proportion of one-third between the specie on hand and the circulation and deposits, must be considered as an established principle at that bank, which is quite the largest, and amongst the oldest—probably, the very oldest bank of circulation in the world."