A Biography of Henry Clay, the Senator from Kentucky / Containing Also, a Complete Report of All His Speeches; Selections From His Private Correspondence; Eulogies in the Senate and House; and a Poem, by George D. Prentice, Esq.

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Fifth, the treasury order of July, 1836.

[Here Mr. Clay went into an examination of these measures, to show that the inflated condition of the country, the wild speculations, which had risen to their height when they began to be checked by the preparations of the local banks necessary to meet the deposit law of June, 1836, the final suspension of specie payments, and the consequent disorders in the currency, commerce, and general business of the country, were all to be traced to the influence of the measures enumerated. All these causes operated immediately, directly, and powerfully upon us, and their effects were indirectly felt in Europe.]

The message imputes to the deposit law, an agency in producing the existing embarrassments. This is a charge frequently made by the friends of the administration against that law. It is true, that, the banks having increased their accommodations, in conformity with the orders of secretary Taney, it might not have been convenient to recall and pay them over for public use. It is true, also, that the manner in which the law was executed by the treasury department, transferring large sums from creditor to debtor portions of the country, without regard to the commerce or business of the country, might have aggravated the inconvenience. But what do those who object to the law think ought to have been done with the surpluses which had accumulated, and were daily augmenting to such an enormous amount in the hands of the deposit banks? Were they to be incorporated with their capital, and remain there for the benefit of the stockholders? Was it not proper and just, that they should be applied to the uses of the people from whom they were collected? And whenever and however taken from the deposit banks, would not inconvenience necessarily happen?

The message asserts that the bank of the United States, chartered by Pennsylvania, has not been able to save itself or to check other institutions, notwithstanding ‘the still greater strength it has been said to possess under its present charter.’ That bank is now a mere state or local institution. Why is it referred to more than the bank of Virginia, or any other local institution? The exalted station which the president fills forbids the indulgence of the supposition, that the allusion has been made to enable the administration to profit by the prejudices which have been excited against it. Was it the duty of that bank, more than any other state bank, to check the localinstitutions? Was it not even under less obligation to do so than the deposit banks, selected and fostered by the general government?

But how could the message venture to assert, that it has greater strength than the late bank of the United States possessed? Whatever may be the liberality of the conditions of its charter, it is impossible that any single state could confer upon it faculties equal to those granted to the late bank of the United States—first, in making it the sole depository of the revenue of the United States; and, secondly, in making its notes receivable in the payment of all public dues. If a bank of the United States had existed, it would have had ample notice of the accumulation of public moneys in the local banks; and, by timely measures of precaution, it could have prevented the speculative uses to which they were applied. Such an institution would have been bound by its relations to the government, to observe its appropriations and financial arrangement and wants, and to hold itself always ready promptly to meet them. It would have drawn together gradually, but certainly, the public moneys, however dispersed. Responsibility would have been concentrated upon it alone, instead of being weakened or lost by diffusion among some eighty or ninety local banks, dispersed throughout the country, and acting without any effective concert.

A subordinate but not unimportant cause of the evils which at present encompass us, has been the course of the late administration towards the compromise act. The great principle of that act, in respect to our domestic industry, was its stability. It was intended and hoped that, by withdrawing the tariff from their annual discussions in congress, of which it had been the fruitful topic, our manufactures would have a certainty, for a long period, as to the measure of protection extended to them by its provisions, which would compensate any reduction in the amount contained in prior acts. For a year or two after it was adopted, the late administration manifested a disposition to respect it, as an arrangement which was to be inviolable. But for some time past it has been constantly threatened from that quarter, and a settled purpose has been displayed to disregard its conditions. Those who had an agency in bringing it forward, and carrying it through congress, have been held up to animadversion; it has been declared by members, high in the confidence of the administration in both houses, to possess no obligatory force beyond any ordinary act of legislation, and new adjustments of the tariff have been proposed in both houses, in direct contravention of the principles of the compromise; and, at the last session, one of them actually passed the senate, against the most earnest entreaty and remonstrance. A portion of the south has not united in these attacks upon the compromise; and I take pleasure in saying, that the two senators from South Carolina, especially, have uniformly exhibited a resolution to adhere to it with perfect honor and fidelity.

The effect of those constant threats and attacks, coming from those high in power, has been most injurious. They have shown to the manufacturing interest that no certain reliance was to be placed upon the steadiness of the policy of the government, no matter under what solemn circumstances it was adopted. That interest has taken alarm; new enterprises have been arrested, old ones curtailed; and at this moment it is the most prostrate of all the interests in the country. One half in amount, as I have been informed, of the manufacturers throughout the country, have actually suspended operations, and those who have not, chiefly confine themselves to working up their stock on hand.

The consequence has been, that we have made too little at home, and purchased too much abroad. This has augmented that foreign debt, the existence of which so powerfully contributed to the suspension, and yet forms an obstacle to the resumption of specie payments.

The senator from South Carolina, (Mr. Calhoun,) attributed the creation of the surplus revenue to the tariff policy, and especially to the acts of 1824 and 1828. I do not perceive any advantage, on the present occasion, in reviving or alluding to the former dissensions which prevailed on the subject of that policy. They were all settled and quieted by the great healing measure, (the compromise,) to which I have referred. By that act I have been willing and ready to abide. And I have desired only that it should be observed and executed in a spirit of good faith and fidelity, similar to that by which I have been ever actuated towards it.

The act of 1828 was no measure of the friends of the manufacturers. Its passage was forced by a coalition between their secret and open opponents. But the system of protection of American industry did not cause the surplus. It proceeded from the extraordinary sales of the public lands. The receipts, from all sources other than that of the public lands, and expenditures of the years 1833–6, (during which the surplus was accumulating,) both amount to about eighty-seven millions of dollars; thus clearly showing, that the customs only supplied the necessary means of public disbursement, and that it was the public domain that produced the surplus.