A Compilation of the Messages and Papers of the Presidents. Volume 3, part 2: Martin Van Buren

by Unknown

The history of these causes and effects in Great Britain and the United States is substantially the history of the revulsion in all other commercial countries.

The present and visible effects of these circumstances on the operations of the Government and on the industry of the people point out the objects which call for your immediate attention.

They are, to regulate by law the safe-keeping, transfer, and disbursement of the public moneys; to designate the funds to be received and paid by the Government; to enable the Treasury to meet promptly every demand upon it; to prescribe the terms of indulgence and the mode of settlement to be adopted, as well in collecting from individuals the revenue that has accrued as in withdrawing it from former depositories; and to devise and adopt such further measures, within the constitutional competency of Congress, as will be best calculated to revive the enterprise and to promote the prosperity of the country.

For the deposit, transfer, and disbursement of the revenue national and State banks have always, with temporary and limited exceptions, been heretofore employed; but although advocates of each system are still to be found, it is apparent that the events of the last few months have greatly augmented the desire, long existing among the people of the United States, to separate the fiscal operations of the Government from those of individuals or corporations.

Again to create a national bank as a fiscal agent would be to disregard the popular will, twice solemnly and unequivocally expressed. On no question of domestic policy is there stronger evidence that the sentiments of a large majority are deliberately fixed, and I can not concur with those who think they see in recent events a proof that these sentiments are, or a reason that they should be, changed.

Events similar in their origin and character have heretofore frequently occurred without producing any such change, and the lessons of experience must be forgotten if we suppose that the present overthrow of credit would have been prevented by the existence of a national bank. Proneness to excessive issues has ever been the vice of the banking system—a vice as prominent in national as in State institutions. This propensity is as subservient to the advancement of private interests in the one as in the other, and those who direct them both, being principally guided by the same views and influenced by the same motives, will be equally ready to stimulate extravagance of enterprise by improvidence of credit. How strikingly is this conclusion sustained by experience! The Bank of the United States, with the vast powers conferred on it by Congress, did not or could not prevent former and similar embarrassments, nor has the still greater strength it has been said to possess under its present charter enabled it in the existing emergency to check other institutions or even to save itself. In Great Britain, where it has been seen the same causes have been attended with the same effects, a national bank possessing powers far greater than are asked for by the warmest advocates of such an institution here has also proved unable to prevent an undue expansion of credit and the evils that flow from it. Nor can I find any tenable ground for the reestablishment of a national bank in the derangement alleged at present to exist in the domestic exchanges of the country or in the facilities it may be capable of affording them. Although advantages of this sort were anticipated when the first Bank of the United States was created, they were regarded as an incidental accommodation, not one which the Federal Government was bound or could be called upon to furnish. This accommodation is now, indeed, after the lapse of not many years, demanded from it as among its first duties, and an omission to aid and regulate commercial exchange is treated as a ground of loud and serious complaint. Such results only serve to exemplify the constant desire among some of our citizens to enlarge the powers of the Government and extend its control to subjects with which it should not interfere. They can never justify the creation of an institution to promote such objects. On the contrary, they justly excite among the community a more diligent inquiry into the character of those operations of trade toward which it is desired to extend such peculiar favors.

The various transactions which bear the name of domestic exchanges differ essentially in their nature, operation, and utility. One class of them consists of bills of exchange drawn for the purpose of transferring actual capital from one part of the country to another, or to anticipate the proceeds of property actually transmitted. Bills of this description are highly useful in the movements of trade and well deserve all the encouragement which can rightfully be given to them. Another class is made up of bills of exchange not drawn to transfer actual capital nor on the credit of property transmitted, but to create fictitious capital, partaking at once of the character of notes discounted in bank and of bank notes in circulation, and swelling the mass of paper credits to a vast extent in the most objectionable manner. These bills have formed for the last few years a large proportion of what are termed the domestic exchanges of the country, serving as the means of usurious profit and constituting the most unsafe and precarious paper in circulation. This species of traffic, instead of being upheld, ought to be discountenanced by the Government and the people.

In transferring its funds from place to place the Government is on the same footing with the private citizen and may resort to the same legal means. It may do so through the medium of bills drawn by itself or purchased from others; and in these operations it may, in a manner undoubtedly constitutional and legitimate, facilitate and assist exchanges of individuals founded on real transactions of trade. The extent to which this may be done and the best means of effecting it are entitled to the fullest consideration. This has been bestowed by the Secretary of the Treasury, and his views will be submitted to you in his report.

But it was not designed by the Constitution that the Government should assume the management of domestic or foreign exchange. It is indeed authorized to regulate by law the commerce between the States and to provide a general standard of value or medium of exchange in gold and silver, but it is not its province to aid individuals in the transfer of their funds otherwise than through the facilities afforded by the Post-Office Department. As justly might it be called on to provide for the transportation of their merchandise. These are operations of trade. They ought to be conducted by those who are interested in them in the same manner that the incidental difficulties of other pursuits are encountered by other classes of citizens. Such aid has not been deemed necessary in other countries. Throughout Europe the domestic as well as the foreign exchanges are carried on by private houses, often, if not generally, without the assistance of banks; yet they extend throughout distinct sovereignties, and far exceed in amount the real exchanges of the United States. There is no reason why our own may not be conducted in the same manner with equal cheapness and safety. Certainly this might be accomplished if it were favored by those most deeply interested; and few can doubt that their own interest, as well as the general welfare of the country, would be promoted by leaving such a subject in the hands of those to whom it properly belongs. A system founded on private interest, enterprise, and competition, without the aid of legislative grants or regulations by law, would rapidly prosper; it would be free from the influence of political agitation and extend the same exemption to trade itself, and it would put an end to those complaints of neglect, partiality, injustice, and oppression which are the unavoidable results of interference by the Government in the proper concerns of individuals. All former attempts on the part of the Government to carry its legislation in this respect further than was designed by the Constitution have in the end proved injurious, and have served only to convince the great body of the people more and more of the certain dangers of blending private interests with the operations of public business; and there is no reason to suppose that a repetition of them now would be more successful.

It can not be concealed that there exists in our community opinions and feelings on this subject in direct opposition to each other. A large portion of them, combining great intelligence, activity, and influence, are no doubt sincere in their belief that the operations of trade ought to be assisted by such a connection; they regard a national bank as necessary for this purpose, and they are disinclined to every measure that does not tend sooner or later to the establishment of such an institution. On the other hand, a majority of the people are believed to be irreconcilably opposed to that measure; they consider such a concentration of power dangerous to their liberties, and many of them regard it as a violation of the Constitution. This collision of opinion has doubtless caused much of the embarrassment to which the commercial transactions of the country have lately been exposed. Banking has become a political topic of the highest interest, and trade has suffered in the conflict of parties. A speedy termination of this state of things, however desirable, is scarcely to be expected. We have seen for nearly half a century that those who advocate a national bank, by whatever motive they may be influenced, constitute a portion of our community too numerous to allow us to hope for an early abandonment of their favorite plan. On the other hand, they must indeed form an erroneous estimate of the intelligence and temper of the American people who suppose that they have continued on slight or insufficient grounds their persevering opposition to such an institution, or that they can be induced by pecuniary pressure or by any other combination of circumstances to surrender principles they have so long and so inflexibly maintained.