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

I pass to the more important, and, I think, conclusive proof, supplied by the provisions themselves of the bill. After providing that all money paid to government for duties, public lands, and other dues, shall be deposited with the treasurer of the United States, the receivers-general; and the mints, the tenth section enacts:

‘That it shall be lawful for the secretary of the treasury to transfer the moneys in the hands of any depositary hereby constituted, to the treasury of the United States; to the mint at Philadelphia; to the branch mint at New Orleans; or to the offices of either of the receivers-general of public moneys, by this act directed to be appointed; to be there safely kept, according to the provisions of this act; and also to transfer moneys in the hands of any one depositary constituted by this act, to any other depositary constituted by the same, at his discretion, and as the safety of the public moneys, and the convenience of the public service, shall seem to him to require; which authority to transfer the moneys belonging to the post-office department is also hereby conferred upon the postmaster-general, so far as its exercise by him may be consistent with the provisions of existing laws; and every depositary constituted by this act, shall keep his account of the moneys paid to or deposited with him, belonging to the post-office department, separate and distinct from the account kept by him of other public moneys so paid or deposited. And for the purpose of payments on the public account, it shall be lawful for the treasurer of the United States to draw upon any of the said depositaries, as he may think most conducive to the public interests, or to the convenience of the public creditors, or both.’

Thus is the secretary invested with unlimited authority to transfer the public money from one depositary to another, and to concentrate it all, if he pleases, at a single point. But, without this provision, the city of New York necessarily must be the place at which the largest portion of the public money will be constantly in deposit. It collects alone about two thirds of the duties on imports, and is becoming, if it be not already, the money centre of the United States. It is not indispensable, to create a bank of issues, that the place of issue and the place of payment should be identical. The issue of the paper may be at one city, and the place of payment may be a different and even distant city. Nor is the form of the paper material, so as to carry it into the general circulation of the money of the country. Whether it be in the shape of bank notes, bank checks, post-notes, or treasury drafts, is of no consequence. If there be confidence in it, and the paper be of convenient amount, passes by delivery, and entitles the holder to demand the specie upon its face, at his pleasure, it will enter into the general circulation; and the extent of its circulation will be governed by the amount issued, and the confidence which it enjoys.

I presume that no one will contest these principles. Let us applythem to the provisions of this bill. The last clause of the tenth section, already cited, declares:

‘And for the purpose of payments on the public account, it shall be lawful for the treasurer of the United States to draw upon any of the said depositaries as he may think most conducive to the public interests, or to the convenience of the public creditors, or both.’

Here is no restriction whatever as to the amount or form of the draft. There is nothing to prevent his making it for one hundred dollars, or fifty dollars, or ten dollars. There is nothing to prevent the use of bank paper; and the draft will have the number of signatures usual to bank paper. It will or may be signed by the treasurer, register, and comptroller.

Now, sir, let me suppose that a citizen has a demand upon the government for five thousand dollars, and applies to the treasurer for payment. On what receiver-general will you, he will be asked, have the amount? On the receiver-general at New York? In what sum? One half of the sum in drafts of one hundred dollars, and the other in drafts of fifty dollars. The treasurer cannot lawfully decline furnishing the required drafts. He is bound by law to consult the convenience of the public creditor. The drafts are given to him. What will he do with them? There is not a spot in the whole circumference of the United States, in which these drafts will not command a premium, or be at par. Every where to the south and west of New York they will command a premium of from one fourth to two and a half per centum. Every where east and north, they will be at par. What, I again ask, will the holder do with them? Will he commit the indiscretion or folly of cashing these drafts, and expose himself to the hazard and inconvenience of losing or carrying the specie about him? No such thing. Being every where better than or equal to specie, he will retain the drafts, and carry them with him to his home, and use them in his business. What I have supposed likely to be done by one, will be done by every creditor of the government. These drafts, to a considerable extent, will remain out, enter the general circulation, and compose a part of the common currency of the country, commanding, at particular places, as notes of the bank of the United States have done, and now do, a premium, but any where being certainly good for the amount on their face. All this is perfectly plain and inevitable; and the amount of this element of government drafts, in the general currency of the country, will be somewhat governed by the amount of the annual disbursements of the government. In the early administration of this treasury bank, its paper will command general and implicit confidence. It will be as much better than the paper of the bank of the United States or the bank of England, as the resources of the United States are superior to those of any mere private corporation. Sub-treasurers and receivers-general may flywith the public money committed to their charge; may peculate or speculate as they please, and, unlike the condition of banks, whose fraudulent officers squander the means of those institutions, the nation remains bound for the redemption of all paper issued under its authority. But the paper of the late bank of the United States acquired a confidence every where, more or less, in and out of the United States. It was received in Canada, in Europe, and at Canton. The government drafts upon receivers-general will have a much more sure and extensive circulation. Who will doubt their payment? Who will question the honor and good faith of the United States in their redemption? The bankers of Europe, the Rothschilds and the Barings, will receive them without hesitation, and prefer them to the specie they represent, whenever the rate of exchange is not decidedly against this country, because they can be more safely and conveniently kept than specie itself. And with respect to our state banks, the treasury drafts will form the basis of their operations. They will be preferred to specie, because they will be more convenient, and free from the hazards incident to the possession of specie. The banks will require no more specie than the wants of the community for change make necessary.

Thus, sir, will these government drafts, or bank notes, as they may be called, remain out in circulation. The issues of the first year, under appropriations of the public revenue, will be followed by the issues of succeeding years. More and more will it be perceived to be needless and indiscreet to cash them; and more and more will the specie of the country accumulate in the custody of the receivers-general, until, after a few years, the greater part of the specie of the country will be found in the vaults of the depositaries, represented by an equal amount of government paper in circulation. I can conceive of no case or motive, but one, for withdrawing the specie from the vaults of the depositaries, and that is, when, from an unfavorable state of our foreign trade, the course of foreign exchange is much against us; and then this system will furnish great facilities to the export of the precious metals.

In process of time, it will be seen, as was observed with respect to the bank of Amsterdam, that there is a much larger amount of specie in deposit with the receivers-general, than is likely to be called for by the paper representing it in circulation, in the common transactions of the business and commerce of the country; and what has been done before, will be done again. Government in a time of necessity, will be tempted to increase its paper issues upon the credit of this dormant specie capital. It will be tempted again and again to resort to this expedient, since it is easier to make emissions of paper, than to lay the burden of taxation on the people. The history of American paper money, during the revolution, of French assignats, and of government banks, throughout the world, tells the whole tale, and gives you the denouement.

But we shall be informed, as has been insisted, that this bill cautiously guards against the degeneracy of the system into a government bank, by the provision contained in the twenty-third section, enjoining the secretary of the treasury ‘to issue and publish regulations to enforce the speedy presentation of all government drafts for payment at the places where payable; and to prescribe the time, according to the different distances of the depositaries from the seat of government, within which all drafts upon them respectively, shall be presented for payment; and in default of such presentation, to direct any other mode and place of payment which he may deem proper.’