Third, a particular law for the District of Columbia, by which all the corporations and people of the District, under severe pains and penalties, are prohibited from circulating, sixty days after the passage of the law, any paper whatever not convertible into specie on demand, and are made liable to prosecution by indictment.
Fourth, and last, the bill to suspend the payment of the fourth instalment to the states, by the provisions of which the deposit banks indebted to the government are placed at the discretion of the secretary of the treasury.
It is impossible to consider this system without perceiving that it is aimed at, and, if carried out, must terminate in, the total subversion of the state banks; and that they will all be placed at the mercy of the federal government. It is in vain to protest that there exists no design against them. The effect of those measures cannot be misunderstood.
And why this new experiment, or untried expedient? The people of this country are tired of experiments. Ought not the administration itself to cease with them? Ought it not to take warning from the events of recent elections? Above all, should not the senate, constituted as it now is, be the last body to lend itself to further experiments upon the business and happiness of this great people? According to the latest expression of public opinion in the several states, the senate is no longer a true exponent of the will of the states or of the people. If it were, there would be thirty-two or thirty-four whigs to eighteen or twenty friends of the administration.
Is it desirable to banish a convertible paper medium, and to substitute the precious metals as the sole currency to be used inall the vast extent of varied business of this entire country? I think not. The quantity of precious metals in the world, looking to our fair distributive share of them, is wholly insufficient. A convertible paper is a great time-saving and labor-saving instrument, independent of its superior advantages in transfers and remittances. A friend, no longer ago than yesterday, informed me of a single bank, whose payments and receipts in one day amounted to two millions of dollars. What time would not have been necessary to count such a vast sum? The payments, in the circle of a year, in the city of New York, were estimated several years ago at fifteen hundred millions. How many men and how many days would be necessary to count such a sum? A young, growing, and enterprising people, like those of the United States, more than any other, need the use of those credits which are incident to a sound paper system. Credit is the friend of indigent merit. Of all nations, Great Britain has most freely used the credit system; and of all, she is the most prosperous. We must cease to be a commercial people; we must separate, divorce ourselves from the commercial world, and throw ourselves back for centuries, if we restrict our business to the exclusive use of specie.
It is objected against a convertible paper system, that it is liable to expansions and contractions; and that the consequence is the rise and fall of prices, and sudden fortunes or sudden ruin. But if is the importation or exportation of specie, which forms the basis of paper, that occasions these fluctuations. If specie alone were the medium of circulation, the same importation or exportation of it would make it plenty or scarce, and affect prices in the same manner. The nominal or apparent prices might vary in figures, but the sensation upon the community would be as great in the one case as in the other. These alternations do not result, therefore, from the nature of the medium, whether that be specie exclusively, or paper convertible into specie, but from the operations of commerce. It is commerce, at last, that is chargeable with expansions and contractions; and against commerce, and not its instrument, should opposition be directed.
I have heard it urged by the senator from South Carolina, (Mr. Calhoun,) with no little surprise, in the course of this debate, that a convertible paper would not answer for a currency, but that the true standard of value was to be found in a paper medium not convertible into the precious metals. If there be, in regard to currency, one truth which the united experience of the whole commercial world has established, I had supposed it to be that emissions of paper money constituted the very worst of all conceivable species of currency. The objections to it are, first, that it is impracticable to ascertain, a priori, what amount can be issued without depreciation; and, second, that there is no adequate security, and, in the nature of things, none can exist, againstexcessive issues. The paper money of North Carolina, to which the senator referred, according to the information which I have received, did depreciate. It was called proc., an abbreviation of the authority under which it was put forth, and it took one and a half, and sometimes two dollars of proc. to purchase one in specie. But if any one desires to understand perfectly the operation of a purely paper currency, let him study the history of the bank of the commonwealth of Kentucky. It was established about fifteen or sixteen years ago, with the consent of a majority of the people of that state. It is winding up and closing its career with the almost unanimous approbation of the whole people. It had an authority to issue, and did issue, notes to the amount of about two millions of dollars. These notes, upon their face, purported an obligation of the bank to pay the holder, on demand, the amount in specie; but it was well known that they would not be so paid. As a security for their ultimate payment, there were, first, the notes of individuals supposed to be well secured, every note put out by the bank being represented by an individual note discounted; secondly, the funds of the state in a prior state bank, amounting to about half a million of dollars; thirdly, the proceeds of a large body of waste lands belonging to the state; and, fourthly, the annual revenue of the state, and public dues, all of which were payable in the notes of the commonwealth bank.
Notwithstanding this apparently solid provision for the redemption of the notes of the bank, they began to depreciate shortly after it commenced operation, and in the course of a few months they sunk as low as fifty per centum—two dollars for one specie dollar. They continued depreciated for a long time, until after large amounts of them were called in and burned. They then rose in value, and now, when there is only some fifty or one hundred thousand dollars out, they have risen to about par. This is owing to the demand for them, created by the wants of the remaining debtors to the bank, and their receivability in payment for taxes. The result of the experiment is, that, although it is possible to sustain at about par a purely paper medium to some amount, if the legislative authority which creates it also create a demand for it, it is impracticable to adjust the proportions of supply and demand so as to keep it at par, and that the tendency is always to an excess of issue. The result, with the people of Kentucky, has been a general conviction of the mischiefs of all issues of an irredeemable paper medium.
Is it practicable for the federal government to put down the state banks, and to introduce an exclusive metallic currency? In the operations of this government, we should ever bear in mind that political power is distributed between it and the states, and that, while our duties are few and clearly defined, the great mass of legislative authority abides with the states. Their banks existwithout us, independent of us, and in spite of us. We have no constitutional power or right to put them down. Why, then, seek their destruction, openly or secretly, directly or indirectly, by discrediting their issues, and by bankrupt laws, and bills of pains and penalties. What are these banks, now so decried and denounced? Intruders, aliens, enemies, that have found their way into the bosom of our country against our will! Reduced to their elements, and the analysis shows that they consist, first, of stockholders; secondly, debtors; and, thirdly, bill-holders and other creditors. In some one of these three relations, a large majority of the people of the United States stand. In making war upon the banks, therefore, you wage war upon the people of the United States. It is not a mere abstraction that you would kick and cuff, bankrupt and destroy; but a sensitive, generous, confiding people, who are anxiously turning their eyes towards you, and imploring relief. Every blow that you inflict upon the banks, reaches them. Press the banks, and you press them.
True wisdom, it seems to me, requires that we should not seek after if we could discover unattainable abstract perfection; but should look to what is practicable in human affairs, and accommodate our legislation to the irreversible condition of things. Since the states and the people have their banks and will have them, and since we have no constitutional authority to put them down, our duty is to come to their relief when in embarrassment, and to exert all our legitimate powers to retain and enable them to perform, in the most beneficial manner, the purposes of their institution. We should embank, not destroy, the fertilizing stream which sometimes threatens an inundation.