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

by Unknown

To say that the refusal of paper money by the Government introduces an unjust discrimination between the currency received by it and that used by individuals in their ordinary affairs is, in my judgment, to view it in a very erroneous light. The Constitution prohibits the States from making anything but gold and silver a tender in the payment of debts, and thus secures to every citizen a right to demand payment in the legal currency. To provide by law that the Government will only receive its dues in gold and silver is not to confer on it any peculiar privilege, but merely to place it on an equality with the citizen by reserving to it a right secured to him by the Constitution. It is doubtless for this reason that the principle has been sanctioned by successive laws from the time of the first Congress under the Constitution down to the last. Such precedents, never objected to and proceeding from such sources, afford a decisive answer to the imputation of inequality or injustice.

But in fact the measure is one of restriction, not of favor. To forbid the public agent to receive in payment any other than a certain kind of money is to refuse him a discretion possessed by every citizen. It may be left to those who have the management of their own transactions to make their own terms, but no such discretion should be given to him who acts merely as an agent of the people—who is to collect what the law requires and to pay the appropriations it makes. When bank notes are redeemed on demand, there is then no discrimination in reality, for the individual who receives them may at his option substitute the specie for them; he takes them from convenience or choice. When they are not so redeemed, it will scarcely be contended that their receipt and payment by a public officer should be permitted, though none deny that right to an individual; if it were, the effect would be most injurious to the public, since their officer could make none of those arrangements to meet or guard against the depreciation which an individual is at liberty to do. Nor can inconvenience to the community be alleged as an objection to such a regulation. Its object and motive are their convenience and welfare.

If at a moment of simultaneous and unexpected suspension by the banks it adds something to the many embarrassments of that proceeding, yet these are far overbalanced by its direct tendency to produce a wider circulation of gold and silver, to increase the safety of bank paper, to improve the general currency, and thus to prevent altogether such occurrences and the other and far greater evils that attend them.

It may indeed be questioned whether it is not for the interest of the banks themselves that the Government should not receive their paper. They would be conducted with more caution and on sounder principles. By using specie only in its transactions the Government would create a demand for it, which would to a great extent prevent its exportation, and by keeping it in circulation maintain a broader and safer basis for the paper currency. That the banks would thus be rendered more sound and the community more safe can not admit of a doubt.

The foregoing views, it seems to me, do but fairly carry out the provisions of the Federal Constitution in relation to the currency, as far as relates to the public revenue. At the time that instrument was framed there were but three or four banks in the United States, and had the extension of the banking system and the evils growing out of it been foreseen they would probably have been specially guarded against. The same policy which led to the prohibition of bills of credit by the States would doubtless in that event have also interdicted their issue as a currency in any other form. The Constitution, however, contains no such prohibition; and since the States have exercised for nearly half a century the power to regulate the business of banking, it is not to be expected that it will be abandoned. The whole matter is now under discussion before the proper tribunal—the people of the States. Never before has the public mind been so thoroughly awakened to a proper sense of its importance; never has the subject in all its bearings been submitted to so searching an inquiry. It would be distrusting the intelligence and virtue of the people to doubt the speedy and efficient adoption of such measures of reform as the public good demands. All that can rightfully be done by the Federal Government to promote the accomplishment of that important object will without doubt be performed.

In the meantime it is our duty to provide all the remedies against a depreciated paper currency which the Constitution enables us to afford. The Treasury Department on several former occasions has suggested the propriety and importance of a uniform law concerning bankruptcies of corporations and other bankers. Through the instrumentality of such a law a salutary check may doubtless be imposed on the issues of paper money and an effectual remedy given to the citizen in a way at once equal in all parts of the Union and fully authorized by the Constitution.

The indulgence granted by Executive authority in the payment of bonds for duties has been already mentioned. Seeing that the immediate enforcement of these obligations would subject a large and highly respectable portion of our citizens to great sacrifices, and believing that a temporary postponement could be made without detriment to other interests and with increased certainty of ultimate payment, I did not hesitate to comply with the request that was made of me. The terms allowed are to the full extent as liberal as any that are to be found in the practice of the executive department. It remains for Congress to decide whether a further postponement may not with propriety be allowed; and if so, their legislation upon the subject is respectfully invited.

The report of the Secretary of the Treasury will exhibit the condition of these debts, the extent and effect of the present indulgence, the probable result of its further extension on the state of the Treasury, and every other fact necessary to a full consideration of the subject. Similar information is communicated in regard to such depositories of the public moneys as are indebted to the Government, in order that Congress may also adopt the proper measures in regard to them.

The receipts and expenditures for the first half of the year and an estimate of those for the residue will be laid before you by the Secretary of the Treasury. In his report of December last it was estimated that the current receipts would fall short of the expenditures by about $3,000,000. It will be seen that the difference will be much greater. This is to be attributed not only to the occurrence of greater pecuniary embarrassments in the business of the country than those which were then predicted, and consequently a greater diminution in the revenue, but also to the fact that the appropriations exceeded by nearly six millions the amount which was asked for in the estimates then submitted. The sum necessary for the service of the year, beyond the probable receipts and the amount which it was intended should be reserved in the Treasury at the commencement of the year, will be about six millions. If the whole of the reserved balance be not at once applied to the current expenditures, but four millions be still kept in the Treasury, as seems most expedient for the uses of the Mint and to meet contingencies, the sum needed will be ten millions.

In making this estimate the receipts are calculated on the supposition of some further extension of the indulgence granted in the payment of bonds for duties, which will affect the amount of the revenue for the present year to the extent of two and a half millions.