Sir, I shall now proceed as briefly as may be in my power to state the situation of this bank on the expiration of its charter, and the effects on the community consequent on it. There is now due to the bank from individuals fifteen millions of dollars. These fifteen millions of dollars must be collected—the power of the bank to grant discounts will have ceased, and the duty of the directors must require them to make the collection. Sir, how is this to be done? Whence can the money be obtained? I shall demonstrate to you presently, that already, from an apprehension of a non-renewal of the charter of the bank, business is nearly at a stand—that navigation, real estate, and merchandise are unsalable; and that a man worth one hundred thousand dollars, at the recently rated value of property, and owing ten thousand dollars, must still be utterly unable to meet his engagements. Suppose, sir, this property consists in houses or shipping; suppose his warehouse is full of goods, and he has a large sum placed at his credit in England? If, sir, he can neither sell his ships nor his goods—if he cannot sell his real estate nor scarcely give away his exchange, which hitherto, to men who had money in England, has been a never-failing source of supply in case of need; I say under these circumstances, sir, whatever may be his property, he cannot meet his engagements. Sir, can men thus situated, solvent as they ought to be ten times over, find relief from the State banks? Certainly not, sir. These banks have already gone to the extreme length of their ability; they have always discounted to an amount in proportion to their capital exceeding that of the Bank of the United States, which is incontrovertibly proved by the dividends they have declared, which have at most universally equalled and frequently exceeded those of the Bank of the United States, notwithstanding the advantage enjoyed by the latter from the deposit of public moneys. Sir, so far from having it in their power, in the case of the dissolution of the Bank of the United States, to assist the debtors to that bank in meeting their engagements to it—I affirm the fact, on which I have myself a perfect reliance, that, take the State banks from Boston to Washington, and after paying their debts to the Bank of the United States, they have not, nor do I believe they have had, for six months back, specie enough to pay the debts due to their depositors, and the amount of their bills in circulation. And here I beg it to be observed, that bank bills and bank deposits, or credits, are precisely the same thing—with this difference, that the latter, from the residence in the neighborhood of the banks, and the vigilance of the proprietors, would be the first called for. How idle is it then to expect to obtain relief from banks which have already extended themselves beyond the bounds of prudence, and have not even at present the ability to meet their existing engagements? It might nearly as well be expected, that a man who was already a bankrupt should prop and support his failing neighbor.
Sir, much has been recently said of the amount of specie in the United States. Theoretical men have made many and vague conjectures about it, for after all it must rest upon conjecture; some have estimated it at ten millions of dollars—some twelve, some twenty, and some newspaper scribblers at forty millions of dollars. Sir, I do not believe that for the last ten years the United States have at any time been more bare of specie than at the present moment. A few years since, specie flowed in upon us in abundance. This resulted principally from an operation of a very singular and peculiar nature. The Spanish Government, as it was then understood, agreed to pay to France a very large sum of money—many millions of dollars, the precise number I am unable to state, from her possessions in South America. France contracted with a celebrated English banking house, as was said at the time, with either the concurrence or connivance of the English Government, that this money should be obtained through the United States. These bankers, by their agent, contracted with certain American houses, principally I believe in Baltimore, for the importation of this specie from La Vera Cruz into the United States, from whence it was not transmitted in coin to Europe, but invested in adventures in the shipments of produce, the proceeds of which ultimately go into the hands of these bankers in London, or of their friends on the continent, from whom it was finally realized by the French Government, either by drafts from Paris, or remittances to that city. This operation had a trebly favorable effect on the United States—it made fortunes for some of the merchants, it furnished the means of shipments to Europe, and it also provided the funds for adventures to the East Indies and to China. But this contract has now been finished some years; and since that time there has been a constant drain of specie from the country. Where it is in future to be procured from, I know not. Not from South America. Specie is, I believe, protected from exportation there, except to Spain. From Spain we cannot get it—to a great part of what was Spain we have now scarcely any trade. From France it cannot be obtained, for if we can get it there even by license, we are obliged to bring back her produce or manufactures. From England it cannot be imported—it is now made highly penal to attempt to send it out of the kingdom. With South America we have but little trade—hitherto we furnished them with smuggled or licensed European and India goods; but now the markets are flooded with these goods by importations direct from England, and which have been attended with great loss to the shippers. For these reasons, it is difficult to find a vessel sailing from the United States to the Spanish ports in South America. These are among the reasons why the amount of specie now in the country is small, and has for some time past been gradually lessening. Sir, without indulging in vague conjectures, what are the best data we have to form an estimate of the amount of specie in the country? The Bank of the United States has five millions of dollars in its vaults. In Boston there are three State banks—in New York I believe four, Philadelphia four, and Baltimore eight—call these nineteen twenty, and allow on an average one hundred and fifty thousand dollars specie, which probably is as much as they generally possess, and this will make three millions of dollars; this amount, united to the sum in the vaults of the Bank of the United States, gives eight millions of dollars—to which, if you allow two millions of dollars for a loose circulation of specie, you get an aggregate of ten millions of dollars. We are sometimes told of the large sums of money hoarded in our country by individuals—probably there may be some among the German farmers in Pennsylvania—perhaps more in that State than in any other, or all the others in the Union; but still of no great amount—the reputation of a little money possessed in this way easily swells into a large sum. At any rate, let the amount be what it may, in time of distress and mistrust, it would afford no addition to your circulating medium; for it is precisely in times like these, that men who hoard money will lock it up most securely.
Sir, the circulation of our country is at present emphatically a paper circulation—very little specie passes in exchange between individuals—it is a circulation bottomed on bank paper and bank credits, amounting perhaps to fifty millions of dollars. And on what, sir, does this circulation rest? It rests upon the ten millions of dollars, if that be the amount of specie in the country, and upon public confidence.
The Bank of the United States has fifteen millions of dollars to collect—call it ten, sir—nobody will dispute this—no one will pretend that this bank is not solvent—the remnant of its surplus dividends, and the interest it will have earned, will be sufficient to cover its losses at New Orleans, at Washington, and perhaps elsewhere. In what are these ten millions of dollars to be collected? In bank bills, the credit of which is at least doubtful? No, sir, in specie; and when this is entirely withdrawn from the State banks, and the banks are unable to pay the money for their bills, who does not see that this confidence is instantly destroyed—that the bubble bursts—that floods of paper bills will be poured in upon them, which they will be unable to meet, and which will for a time be as worthless as oak leaves—that the banks themselves must, at least temporarily, become bankrupts, and that a prostration of credit, and all those habits of punctuality which for twenty years, we have been striving so successfully to establish, will inevitably ensue, and, with them, also, there must be suspended the commerce, the industry and manufactures of the country; and a scene of embarrassment and derangement be produced, which has been unexampled in our history.
I will now make a very few remarks on the effects which the dissolution of the bank will have on the revenue and fiscal concerns of the country. Can it be supposed, sir, that the source to which will be imputed the distress that will have flowed from this event, will be the first to be thought of to be guarded against a participation of the evils that will result from it, in preference to the claims of the most intimate friends and connections? No, sir, the bonds due to the United States will be collected only at the tail of an execution. But I mean not to press this consideration. Admit, for a moment, that they will all be equally well collected—that they will be paid as usual, although it is palpable that for a considerable time the merchants will be unable to find the means to pay them: yet, admit, sir, that the money is collected in the State banks, how is it to be transmitted? It must come to the centre of the seat of Government; very little of the public money is expended in the Northern section of the Union. Will it come from the Eastward, in bills of the State banks? Penobscot bank bills sometimes will not pass in Boston; Boston bills pass with difficulty in New York or Philadelphia; and the bills of New York State banks probably would not be readily current in Washington. You must, then, sir, if Boston gives you a revenue of two millions of dollars, transmit the greater part of it to the seat of Government, or wherever it may be wanted in specie. Can this be done? We have not two millions of dollars of specie in our town, and, I may almost venture to say, never had. Suppose you make this transmission once, can you do it a second time? No, sir, the thing is utterly impracticable. You must adopt some other mode. Exchange between the different cities will not reach the case; frequently it cannot be purchased even for an insignificant amount.
Sir, will your money, when collected, be safe in the State banks? Of this I am extremely doubtful. Solicitations will undoubtedly be made for it from all quarters. They have already been made. In one instance, I am told, sir, the agent of a bank, even during the few past weeks, has been here for the purpose—that suddenly the agent was gone, and in a few days it was discovered that, owing to the failure of one of the debtors to the bank which he represented, (a great broker,) the stock had fallen in one day near 20 per cent. What was this the evidence of, but that those who were most interested in this bank, the stockholders who were on the spot, and best acquainted with its solidity, were willing to wash their hands of their concern in it, at almost any rate of sacrifice? Sir, I only state this, as it was here reported. I have no personal knowledge on the subject. But will you trust your funds with an institution thus precarious, and whose solidity is distrusted even by its best friends?
Wednesday, February 13.
The credentials of Nicholas Gilman, appointed a Senator by the Legislature of the State of New Hampshire, for the term of six years, commencing on the 4th day of March next, were read, and ordered to lie on file.