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.

by Unknown

Who, Mr. President, are the most conspicuous of those, who perseveringly pressed this bill upon congress and the American people? Its drawer is the distinguished gentleman in the white house, not far off; its endorser is the distinguished senator from South Carolina, here present. What the drawer thinks of the endorser, his cautious reserve and stifled enmity prevent us from knowing. But the frankness of the endorser has not left us in the same ignorance with respect to his opinion of the drawer. He has often expressed it upon the floor of the senate. On an occasion not very distant, denying to him any of the nobler qualities of the royal beast of the forest, he attributed to him those which belong to the most crafty, most skulking, and one of the meanest of the quadruped tribe. Mr. President, it is due to myself to say, that I do not altogether share with the senator from South Carolina in this opinion of the president of the United States. I have always found him, in his manners and deportment, civil, courteous, and gentlemanly; and he dispenses, in the noble mansion which he now occupies, one worthy the residence of the chief magistrate of a great people, a generous and liberal hospitality. An acquaintance with him, of more than twenty years’ duration, has inspired me with a respect for the man, although, I regret to be compelled to say, I detest the magistrate.

The eloquent senator from South Carolina has intimated that the course of my friends and myself, in opposing this bill, was unpatriotic, and that we ought to have followed in his lead; and, in a late letter of his, he has spoken of his alliance with us, and of his motives for quitting it. I cannot admit the justice of his reproach. We united, if, indeed, there were any alliance in the case, to restrain the enormous expansion of executive power; to arrest the progress of corruption; to rebuke usurpation; and to drive the Goths and Vandals from the capital; to expel Brennus and his horde from Rome, who, when he threw his sword into the scale, to augment the ransom demanded from the mistress of the world, showed his preference for gold; that he was a hard-money chieftain. It was by the much more valuable metal of iron that he was driven from her gates. And how often have we witnessed the senator from South Carolina, with woful countenance, and in doleful strains, pouring forth touching and mournful eloquence on the degeneracy of the times, and the downward tendency of the republic? Day after day, in the senate, have we seen the displays of his lofty and impassioned eloquence. Although I shared largely with the senator, in his apprehension for the purity of our institutions, and the permanency of civil liberty, disposed always to look at the brighter side of human affairs, I was sometimes inclined to hope that the vivid imagination of the senator had depicted the dangers by which we were encompassed in somewhat stronger colors than they justified. The arduous contest in whichwe were so long engaged, was about to terminate in a glorious victory. The very object for which the alliance was formed, was about to be accomplished. At this critical moment the senator left us; he left us for the very purpose of preventing the success of the common cause. He took up his musket, knapsack, and shot-pouch, and joined the other party. He went, horse, foot, and dragoon, and he himself composed the whole corps. He went, as his present most distinguished ally commenced with his expunging resolution, solitary and alone. The earliest instance recorded in history, within my recollection, of an ally drawing off his forces from the combined army, was that of Achilles, at the siege of Troy. He withdrew with all his troops, and remained in the neighborhood, in sullen and dignified inactivity. But he did not join the Trojan forces; and when, during the progress of the siege, his faithful friend fell in battle, he raised his avenging arm, drove the Trojans back into the gates of Troy, and satiated his vengeance by slaying Priam’s noblest and dearest son, the finest hero in the immortal Iliad. But Achilles had been wronged, or imagined himself wronged, in the person of the fair and beautiful Briseis. We did no wrong to the distinguished senator from South Carolina. On the contrary, we respected him, confided in his great and acknowledged ability, his uncommon genius, his extensive experience, his supposed patriotism; above all, we confided in his stern and inflexible fidelity. Nevertheless, he left us, and joined our common opponents, distrusting and distrusted. He left us, as he tells us in his Edgefield letter, because the victory which our common arms were about to achieve, was not to enure to him and his party, but exclusively to the benefit of his allies and their cause. I thought that, actuated by patriotism, (that noblest of human virtues,) we had been contending together for our common country, for her violated rights, her threatened liberties, her prostrate constitution. Never did I suppose that personal or party considerations entered into our views. Whether, if victory shall ever again be about to perch upon the standard of the spoils party, (the denomination which the senator from South Carolina has so often given to his present allies,) he will not feel himself constrained, by the principles on which he has acted, to leave them, because it may not enure to the benefit of himself and his party, I leave to be adjusted between themselves.

The speech of the senator from South Carolina was plausible, ingenious, abstract, metaphysical, and generalizing. It did not appear to me to be adapted to the bosoms and business of human life. It was aërial, and not very high up in the air, Mr. President, either, not quite as high as Mr. Clayton was in his last ascension in his balloon. The senator announced that there was a single alternative, and no escape from one or the other branch of it. He stated that we must take the bill under consideration, or the substituteproposed by the senator from Virginia. I do not concur in that statement of the case. There is another course embraced in neither branch of the senator’s alternative; and that course is, to do nothing; always the wisest, when you are not certain what you ought to do. Let us suppose that neither branch of the alternative is accepted, and that nothing is done. What, then, would be the consequence? There would be a restoration of the law of 1789, with all its cautious provisions and securities, provided by the wisdom of our ancestors, which has been so trampled upon by the late and present administrations. By that law, establishing the treasury department, the treasure of the United States is to be received, kept, and disbursed, by the treasurer, under a bond with ample security, under a large penalty fixed by law, and not left, as this bill leaves it, to the uncertain discretion of a secretary of the treasury. If, therefore, we were to do nothing, that law would be revived; the treasurer would have the custody, as he ought to have, of the public money, and doubtless he would make special deposits of it, in all instances, with safe and sound state banks, as in some cases the secretary of the treasury is now obliged to do. Thus, we should have in operation that very special deposit system, so much desired by some gentlemen, by which the public money would remain separate and unmixed with the money of banks. There is yet another course, unembraced by either branch of the alternative presented by the senator from South Carolina; and that is, to establish a bank of the United States, constituted according to the old and approved method of forming such an institution, tested and sanctioned by experience; a bank of the United States, which should blend public and private interests, and be subject to public and private control, united together in such manner as to present safe and salutary checks against all abuses. The senator mistakes his own abandonment of that institution as ours. I know that the party in power has barricaded itself against the establishment of such a bank. It adopted, at the last extra session, the extraordinary and unprecedented resolution, that the people of the United States should not have such a bank, although it might be manifest that there was a clear majority of them demanding it. But the day may come, and I trust is not distant, when the will of the people must prevail in the councils of their own government; and, when it does arrive, a bank will be established.

The senator from South Carolina reminds us that we denounced the pet bank system; and so we did, and so we do. But does it therefore follow, that, bad as that system was, we must be driven into the acceptance of a system infinitely worse? He tells us that the bill under consideration takes the public funds out of the hands of the executive, and places them in the hands of the law. It does no such thing. They are now without law, it is true, in the custody of the executive; and the bill proposes by law to confirm them inthat custody, and to convey new and enormous powers of control to the executive over them. Every custodary of the public funds, provided by the bill, is a creature of the executive, dependent upon his breath, and subject to the same breath for removal, whenever the executive, from caprice, from tyranny, or from party motives, shall choose to order it. What safety is there for the public money, if there were a hundred subordinate executive officers charged with its care, whilst the doctrine of the absolute unity of the whole executive power, promulgated by the last administration, and persisted in by this, remains unrevoked and unrebuked.

Whilst the senator from South Carolina professes to be the friend of state banks, he has attacked the whole banking system of the United States. He is their friend; he only thinks they are all unconstitutional! Why? Because the coining power is possessed by the general government, and that coining power, he argues, was intended to supply a currency of the precious metals; but the state banks absorb the precious metals, and withdraw them from circulation, and, therefore, are in conflict with the coining power. That power, according to my view of it, is nothing but a naked authority to stamp certain pieces of the precious metals, in fixed proportions of alloy and pure metal, prescribed by law, so that their exact value may be known. When that office is performed, the power is functus officio; the money passes out of the mint, and becomes the lawful property of those who legally acquire it. They may do with it as they please, throw it into the ocean, bury it in the earth, or melt it in a crucible, without violating any law. When it has once left the vaults of the mint, the law-maker has nothing to do with it, but to protect it against those who attempt to debase or counterfeit, and, subsequently, to pass it as lawful money. In the sense in which the senator supposes banks to conflict with the coining power, foreign commerce, and especially our commerce with China, conflict with it much more extensively. That is the great absorbent of the precious metals, and is, therefore, much more unconstitutional than the state banks. Foreign commerce sends them out of the country; banks retain them within it. The distinguished senator is no enemy to the banks; he merely thinks them injurious to the morals and industry of the country. He likes them very well, but he nevertheless believes that they levy a tax of twenty-five millions annually on the industry of the country! Let us examine, Mr. President, how this enormous and iniquitous assessment is made, according to the argument of the senator from South Carolina. He states that there is a mass of debt due from the community to the banks, amounting to four hundred and seventy-five millions of dollars, the interest upon which, constituting about that sum of twenty-five millions of dollars, forms the exceptionable tax. Now, this sum is not paid by the whole community, but only by those individuals who obtain discounts fromthe banks. They borrow money at six per centum interest, and invest it in profitable adventures, or otherwise employ it. They would not borrow it if they did not suppose they could make profit by it; and the probability is, that they do make profit by it. Instead, therefore, of there being any loss in the operation, there is an actual gain to the community, by the excess of profit made beyond six per centum interest, which they pay. What are banks? They are mere organized agencies, for the loan of money, and the transaction of monetary business; regulated agencies, acting under the prescriptions of law, and subject to a responsibility, moral and legal, far transcending that under which any private capitalist operates. A number of persons, not choosing to lend out their money privately, associate together, bring their respective capitals into a common stock, which is controlled and managed by the corporate government of a bank. If no association whatever had been formed, a large portion of this capital, a large portion, therefore, of that very debt of four hundred and seventy-five millions of dollars, would still exist, in the shape of private loans. The senator from South Carolina might as well collect the aggregate amount of all the mortgages, bonds, and notes, which have been executed in the United States, for loans, and assert that the interest paid upon the total sum, constituted a tax, levied upon the community.

In the liquidation of the debt due to the banks from the community, and from the banks to the community, there would not be as much difficulty as the senator seems to apprehend. From the mass of debts due to the banks are to be deducted, first, the amount of subscriptions which constitute their capitals; secondly, the amount of deposits to the credit of individuals in their custody; and, thirdly, the amount of their notes in circulation. How easily will these mutual debts neutralize each other! The same person, in numberless instances, will combine in himself the relations both of creditor and debtor.

The only general operation of banks beyond their discounts and deposits, which pervades the whole community, is that of furnishing a circulation in redeemable paper, beyond the amount of specie to redeem it in their vaults. And can it be doubted that this additional supply of money furnishes a powerful stimulus to industry and production, fully compensating any casual inconveniences, which sometimes, though rarely, occur? Banks reduce the rate of interest, and repress inordinate usury. The salutary influence of banking operations is demonstrated in countries and sections of country where they prevail, when contrasted with those in which they are not found. In the former, all is bustle, activity, general prosperity. The country is beautified and adorned by the noble works of internal improvement; the cities are filled with splendid edifices, and the wharves covered with the rich productions of our own or of foreign climates. In the latter, all is sluggishness,slothfulness, and inactivity. England, in modern times, illustrates the great advantages of banks, of credit, and of stimulated industry. Contrast her with Spain, destitute of all those advantages. In ancient times, Athens would present an image of full and active employment of all the energies of man, carried to the highest point of civilization, whilst her neighbor, Sparta, with her iron money, affords another of the boasted benefits of metallic circulation.

The senator from South Carolina would do the banks no harm; but they are deemed by him highly injurious to the planting interest! According to him, they inflate prices, and the poor planter sells his productions for hard money, and has to purchase his supplies at the swollen prices produced by a paper medium. Now, I must dissent altogether from the senator’s statement of the case. England, the principal customer of the planter, is quite as much, if not more, a paper country than ours. And the paper-money prices of the one country are neutralized by the paper-money prices of the other country. If the argument were true, that a paper-money country trades disadvantageously with a hard-money country, we ought to continue to employ a paper medium, to counterbalance the paper medium of England. And if we were to banish our paper, and substitute altogether a metallic currency, we should be exposed to the very inequality which has been insisted upon. But there is nothing in that view of the matter which is presented by the senator from South Carolina. If, as he asserts, prices were always inflated in this country, beyond their standard in England, the rate of exchange would be constantly against us. An examination, however, into the actual state of exchange between the two countries, for a long series of years, evinces that it has generally been in our favor. In the direct trade between England and this country, I have no doubt there is a large annual balance against us; but that balance is adjusted and liquidated by balances in our favor in other branches of our foreign trade, which have finally concentrated in England, as the great centre of the commercial world.

Of all the interests and branches of industry in this country, none has profited more by the use and employment of credit and capital derived from banks and other sources, than the planting interest. It habitually employs credit in all countries where planting agriculture prevails. The states of Alabama, Mississippi, Arkansas, and Louisiana, have almost sprung into existence, as it were, by magic, or, at least, have been vastly improved and extended, under the influence of the credit system. Lands, slaves, utensils, beasts of burden, and other supplies, have been constantly bought, and still continue to be purchased, upon credit; and bank agency is all essential to give the most beneficial operation to these credits. But the argument of the senator from South Carolina,which I am combating, would not be correct, if it were true that we have inflated prices on this side of the Atlantic, without a corresponding inflation of price on the other side; because the planter generally selling at home, and buying at home, the proceeds of his sale, whatever they may be, constitute the means by which he effects his purchases, and consequently neutralize each other. In what do we of the west receive payment for the immense quantity of live stock and other produce of our industry, which we annually sell to the south and southwest, but that paper medium now so much decried and denounced? The senator from South Carolina is very fond of the state banks; but he thinks there is no legitimate currency except that of the constitution. He contends that the power which the government possesses to impose taxes, restricts it, in their payment, to the receipt of the precious metals. But the constitution does not say so. The power is given in broad and unrestricted terms; and the government is left at liberty to collect the taxes in whatever medium or commodity, from the exigencies of the case, it can collect them. It is, doubtless, much the most convenient to collect them in money, because that represents, or can command, every thing, the want of which is implied by the power of taxation. But suppose there was no money in the country; none, whatever, to be extorted by the tax-gatherer from an impoverished people? Is the power of government to cease, and the people to be thrown back into a state of nature? The senator asks, if taxes could be levied and collected in tobacco, in cotton, and other commodities? Undoubtedly they could, if the necessity existed for such an inconvenient imposition. Such a case of necessity did exist in the colony of Virginia, and other colonies, prior to the revolution, and taxes were accordingly levied in tobacco or other commodities, as wolf-scalps, even at this day, compose a part of the revenue of more than one state.

The argument, then, of the senator, against the right of the government to receive bank notes in payment of public dues, a practice coeval with the existence of the government, does not seem to me to be sound. It is not accurate, for another reason. Bank notes, when convertible at the will of the holder into specie, are so much counted or told specie, like the specie which is counted and put in marked kegs, denoting the quantity of their contents. The senator tells us, that it has been only within a few days that he has discovered that it is illegal to receive bank notes in payment of public dues. Does he think that the usage of the government, under all its administrations, and with every party in power, which has prevailed for nigh fifty years, ought to be set aside by a novel theory of his, just dreamed into existence, even if it possess the merit of ingenuity? The bill under consideration, which has been eulogized by the senator as perfect in its structure and details, contains a provision that bank notes shall be receivedin diminished proportions, during a term of six years. He himself introduced that identical principle. It is the only part of the bill that is emphatically his. How, then, can he contend that it is unconstitutional to receive bank notes in payment of public dues? I appeal from himself to himself. The senator further contends, that general deposits cannot be made with banks, and be thus confounded with the general mass of the funds on which they transact business. The argument supposes that the money collected for taxes must be preserved in identity; but that is impossible, often, to do. May not a collector give the small change which he has received from one tax-payer, to another tax-payer, to enable him to effect his payment? May he not change gold for silver, or vice versa, or both, if he be a distant collector, to obtain an undoubted remittance to the public treasury? What, Mr. President, is the process of making deposits with banks? The deposit is made, and a credit is entered for its amount to the government. That credit is supposed to be the exact equivalent of the amount deposited, ready and forthcoming to the government whenever it is wanted for the purposes of disbursement. It is immaterial to the government whether it receives back again the identical money put in, or other money of equal value. All that it wants is, what it put in the bank, or its equivalent; and that, in ordinary times, with such prudent banks as alone ought to be selected, it is sure of getting. Again: the treasury has frequently to make remittances to foreign countries, to meet the expenditure necessary there for our naval squadrons, and other purposes. They are made to the bankers, to the Barings or the Rothschilds, in the form of bills of exchange, purchased in the market by the agents of the government here, with money drawn out of the treasury. Here is one conversion of the money received from the tax-gatherer into the treasury. The bills are transmitted to the bankers, honored, paid, and the amount credited by them to the United States. Are the bankers bound to retain the proceeds of the bills in identity? Are they bound to do more than credit the government for an equal amount, for which they stand responsible, whenever it is wanted? If they should happen to use any portion of those very proceeds of bills remitted to them in their banking operations, would it be drawing money from the treasury, contrary to the provisions of the constitution? The senator from South Carolina contends, that there is no constitutional power to contract with the twenty-five selected banks, as proposed in the substitute; yet the deposit act of 1836, which obtained the hearty approbation of that senator, contained a similar provision; and the very bill under consideration, so warmly supported by him, provides, under certain contingencies, for contracts to be made with state banks, to receive deposits of the public money upon compensation. He objects to the substitute, that it converts twenty-five state banks into a systemof federal institutions; but the employment of state institutions by the federal authority, no more makes them federal, than the employment of federal institutions by the states, converts them into state institutions. This mutual aid, and this reciprocal employment of the several institutions of the general and particular governments, is one of the results and beauties of our admirable, though complex system of government. The general government has the use of the capital, court-houses, prisons, and penitentiaries, in the several states. Do they, therefore, cease to appertain to the states? It is to be borne in mind, that although the state banks may occasionally be used by the federal authority, their legal responsibility to the several states remains unimpaired. They continue to be accountable to them, and their existence can only be terminated or prolonged by the state authority. And being governed, as they are, by corporate authority, emanating from, and amenable to, state jurisdiction, and not under the control of the executive of the United States, constitutes at once a greater security for the public money, and more safety to the public liberty. It has been argued that a separation of the government from the banks will diminish the executive power. It must be admitted that the custody of the public money in various banks, subject to the control of state authority, furnishes some check upon the possible abuses of the executive government. But the argument maintains, that the executive has least power when it has most complete possession of the public treasury! The senator from South Carolina contends that the separation in question being once effected, the relation of the federal government and the state banks will be antagonistical. I believe so, Mr. President. That is the very thing I wish to prevent. I want them to live in peace, harmony, and friendship. If they are antagonists, how is it possible that the state banks can maintain their existence against the tremendous influence of this government? Especially, if this government should be backed by such a vast treasury bank, as I verily believe this bill is intended to create! And what becomes of the argument urged by the senator from South Carolina, and the abolition resolutions offered by him at an early period of the session, asserting that the general government is bound to protect the domestic institutions of the several states?