In the deliberations of Congress on this subject it is hoped that a spirit of mutual concession and compromise between conflicting interests may prevail, and that the result of their labors may be crowned with the happiest consequences.
By the Constitution of the United States it is provided that "no money shall be drawn from the Treasury but in consequence of appropriations made by law." A public treasury was undoubtedly contemplated and intended to be created, in which the public money should be kept from the period of collection until needed for public uses. In the collection and disbursement of the public money no agencies have ever been employed by law except such as were appointed by the Government, directly responsible to it and under its control. The safe-keeping of the public money should be confided to a public treasury created by law and under like responsibility and control. It is not to be imagined that the framers of the Constitution could have intended that a treasury should be created as a place of deposit and safe-keeping of the public money which was irresponsible to the Government. The first Congress under the Constitution, by the act of the 2d of September, 1789, "to establish the Treasury Department," provided for the appointment of a Treasurer, and made it his duty "to receive and keep the moneys of the United States" and "at all times to submit to the Secretary of the Treasury and the Comptroller, or either of them, the inspection of the moneys in his hands."
That banks, national or State, could not have been intended to be used as a substitute for the Treasury spoken of in the Constitution as keepers of the public money is manifest from the fact that at that time there was no national bank, and but three or four State banks, of limited capital, existed in the country. Their employment as depositories was at first resorted to to a limited extent, but with no avowed intention of continuing them permanently in place of the Treasury of the Constitution. When they were afterwards from time to time employed, it was from motives of supposed convenience. Our experience has shown that when banking corporations have been the keepers of the public money, and been thereby made in effect the Treasury, the Government can have no guaranty that it can command the use of its own money for public purposes. The late Bank of the United States proved to be faithless. The State banks which were afterwards employed were faithless. But a few years ago, with millions of public money in their keeping, the Government was brought almost to bankruptcy and the public credit seriously impaired because of their inability or indisposition to pay on demand to the public creditors in the only currency recognized by the Constitution. Their failure occurred in a period of peace, and great inconvenience and loss were suffered by the public from it. Had the country been involved in a foreign war, that inconvenience and loss would have been much greater, and might have resulted in extreme public calamity. The public money should not be mingled with the private funds of banks or individuals or be used for private purposes. When it is placed in banks for safe-keeping, it is in effect loaned to them without interest, and is loaned by them upon interest to the borrowers from them. The public money is converted into banking capital, and is used and loaned out for the private profit of bank stockholders, and when called for, as was the case in 1837, it may be in the pockets of the borrowers from the banks instead of being in the public Treasury contemplated by the Constitution. The framers of the Constitution could never have intended that the money paid into the Treasury should be thus converted to private use and placed beyond the control of the Government.
Banks which hold the public money are often tempted by a desire of gain to extend their loans, increase their circulation, and thus stimulate, if not produce, a spirit of speculation and extravagance which sooner or later must result in ruin to thousands. If the public money be not permitted to be thus used, but be kept in the Treasury and paid out to the public creditors in gold and silver, the temptation afforded by its deposit with banks to an undue expansion of their business would be checked, while the amount of the constitutional currency left in circulation would be enlarged by its employment in the public collections and disbursements, and the banks themselves would in consequence be found in a safer and sounder condition. At present State banks are employed as depositories, but without adequate regulation of law whereby the public money can be secured against the casualties and excesses, revulsions, suspensions, and defalcations to which from overissues, overtrading, an inordinate desire for gain, or other causes they are constantly exposed. The Secretary of the Treasury has in all cases when it was practicable taken collateral security for the amount which they hold, by the pledge of stocks of the United States or such of the States as were in good credit. Some of the deposit banks have given this description of security and others have declined to do so.
Entertaining the opinion that "the separation of the moneys of the Government from banking institutions is indispensable for the safety of the funds of the Government and the rights of the people," I recommend to Congress that provision be made by law for such separation, and that a constitutional treasury be created for the safe-keeping of the public money. The constitutional treasury recommended is designed as a secure depository for the public money, without any power to make loans or discounts or to issue any paper whatever as a currency or circulation. I can not doubt that such a treasury as was contemplated by the Constitution should be independent of all banking corporations. The money of the people should be kept in the Treasury of the people created by law, and be in the custody of agents of the people chosen by themselves according to the forms of the Constitution—agents who are directly responsible to the Government, who are under adequate bonds and oaths, and who are subject to severe punishments for any embezzlement, private use, or misapplication of the public funds, and for any failure in other respects to perform their duties. To say that the people or their Government are incompetent or not to be trusted with the custody of their own money in their own Treasury, provided by themselves, but must rely on the presidents, cashiers, and stockholders of banking corporations, not appointed by them nor responsible to them, would be to concede that they are incompetent for self-government.
In recommending the establishment of a constitutional treasury in which the public money shall be kept, I desire that adequate provision be made by law for its safety and that all Executive discretion or control over it shall be removed, except such as may be necessary in directing its disbursement in pursuance of appropriations made by law.
Under our present land system, limiting the minimum price at which the public lands can be entered to $1.25 per acre, large quantities of lands of inferior quality remain unsold because they will not command that price. From the records of the General Land Office it appears that of the public lands remaining unsold in the several States and Territories in which they are situated, 39,105,577 acres have been in the market subject to entry more than twenty years, 49,638,644 acres for more than fifteen years, 73,074,600 acres for more than ten years, and 106,176,961 acres for more than five years. Much the largest portion of these lands will continue to be unsalable at the minimum price at which they are permitted to be sold so long as large territories of lands from which the more valuable portions have not been selected are annually brought into market by the Government. With the view to the sale and settlement of these inferior lands, I recommend that the price be graduated and reduced below the present minimum rate, confining the sales at the reduced prices to settlers and cultivators, in limited quantities. If graduated and reduced in price for a limited term to $1 per acre, and after the expiration of that period for a second and third term to lower rates, a large portion of these lands would be purchased, and many worthy citizens who are unable to pay higher rates could purchase homes for themselves and their families. By adopting the policy of graduation and reduction of price these inferior lands will be sold for their real value, while the States in which they lie will be freed from the inconvenience, if not injustice, to which they are subjected in consequence of the United States continuing to own large quantities of the public lands within their borders not liable to taxation for the support of their local governments.
I recommend the continuance of the policy of granting preemptions in its most liberal extent to all those who have settled or may hereafter settle on the public lands, whether surveyed or unsurveyed, to which the Indian title may have been extinguished at the time of settlement. It has been found by experience that in consequence of combinations of purchasers and other causes a very small quantity of the public lands, when sold at public auction, commands a higher price than the minimum rates established by law. The settlers on the public lands are, however, but rarely able to secure their homes and improvements at the public sales at that rate, because these combinations, by means of the capital they command and their superior ability to purchase, render it impossible for the settler to compete with them in the market. By putting down all competition these combinations of capitalists and speculators are usually enabled to purchase the lands, including the improvements of the settlers, at the minimum price of the Government, and either turn them out of their homes or extort from them, according to their ability to pay, double or quadruple the amount paid for them to the Government. It is to the enterprise and perseverance of the hardy pioneers of the West, who penetrate the wilderness with their families, suffer the dangers, the privations, and hardships attending the settlement of a new country, and prepare the way for the body of emigrants who in the course of a few years usually follow them, that we are in a great degree indebted for the rapid extension and aggrandizement of our country.
Experience has proved that no portion of our population are more patriotic than the hardy and brave men of the frontier, or more ready to obey the call of their country and to defend her rights and her honor whenever and by whatever enemy assailed. They should be protected from the grasping speculator and secured, at the minimum price of the public lands, in the humble homes which they have improved by their labor. With this end in view, all vexatious or unnecessary restrictions imposed upon them by the existing preemption laws should be repealed or modified. It is the true policy of the Government to afford facilities to its citizens to become the owners of small portions of our vast public domain at low and moderate rates.
The present system of managing the mineral lands of the United States is believed to be radically defective. More than 1,000,000 acres of the public lands, supposed to contain lead and other minerals, have been reserved from sale, and numerous leases upon them have been granted to individuals upon a stipulated rent. The system of granting leases has proved to be not only unprofitable to the Government, but unsatisfactory to the citizens who have gone upon the lands, and must, if continued, lay the foundation of much future difficulty between the Government and the lessees. According to the official records, the amount of rents received by the Government for the years 1841, 1842, 1843, and 1844 was $6,354.74, while the expenses of the system during the same period, including salaries of superintendents, agents, clerks, and incidental expenses, were $26,111.11, the income being less than one-fourth of the expenses. To this pecuniary loss may be added the injury sustained by the public in consequence of the destruction of timber and the careless and wasteful manner of working the mines. The system has given rise to much litigation between the United States and individual citizens, producing irritation and excitement in the mineral region, and involving the Government in heavy additional expenditures. It is believed that similar losses and embarrassments will continue to occur while the present system of leasing these lands remains unchanged. These lands are now under the superintendence and care of the War Department, with the ordinary duties of which they have no proper or natural connection. I recommend the repeal of the present system, and that these lands be placed under the superintendence and management of the General Land Office, as other public lands, and be brought into market and sold upon such terms as Congress in their wisdom may prescribe, reserving to the Government an equitable percentage of the gross amount of mineral product, and that the preemption principle be extended to resident miners and settlers upon them at the minimum price which may be established by Congress.