If, under this system, during this stupendous rebellion, involving the existence of the Government, with armies and expenditures unexampled in history, the Secretary (as, with the aid of Congress and the banks, I believe he can) should secure us a sound and uniform currency, and negotiate vast loans, running twenty years, at par, the Government paying only four per cent. interest per annum, he will have accomplished a financial miracle, and deserved a fame nearest to that of the first and greatest of his predecessors, the peerless Hamilton.
The bill organizing the new system, presented in Congress by Mr. Hooper last summer, is drawn with great ability, and it is much to be deplored, that (with some amendments) it had not then become a law, when it could have been much more easily put in operation, and would have saved hundreds of millions of dollars to the Government.
But the fifty-fifth section of that bill provides that all the banks organized under it are to become 'depositaries of the public moneys,' excepting those in 'the city of Washington.' Why this discrimination? If there be any place where banks, organized under a national charter, issuing a national currency, and receiving national deposits, should be encouraged, it is here. With no discrimination against them, such banks would be established here with considerable capital. And why not? It cannot be intended to discourage the establishment of such banks here, and thus defeat, to that extent, the success of the system. It is here, if anywhere, that such banks should receive the public deposits, where they could be constantly secured from day to day under the immediate supervision of the Government. Besides, the only effect of such a discrimination would be to drive such banks to Georgetown, Alexandria, or some other speculative site outside the city or District. This city has just been consecrated to freedom by Congress, and it is hoped that, in commencing its new career, no discrimination will be made against it. Indeed, I think it would be wise, in order to insure the success here of the new system, to allow the district banks organized under this law to receive the same rate of interest as is permitted in New York.
I have contended, during the last fourth of a century, that all State bank currency is unconstitutional. This rebellion will demonstrate the truth of that proposition, and the question ultimately be so decided by the Supreme Court of the United States. This, it is true, might require some of those Judges, if then living, to change their opinion on some points; but this has been done before, and even on constitutional questions; and State banks will fall before judicial action, as well as nullification, State allegiance, secession, and the whole brood of kindred heresies.
A republic which cannot regulate its currency, or which leaves that power with thirty-four separate States, each legislating at its pleasure and without uniformity, abandons an essential national authority, and this abdication has furnished one of the main supports of the rebellion. With nothing but a national currency, the revolted States never could have successfully inaugurated this war, and we must deprive them in all time to come of this terrible ally of treason. To permit the States to provide the circulating medium, the money of the country, is to enable them to furnish the sinews of war, and clothe them with a power to overthrow the Government.
With only such a national currency as is now proposed, issued by the Government to these banks, organized by Congress, and based on the deposit in the Federal treasury of United States stock, the rebellion would have been impossible. Our Government was so mild and benignant, that we deemed it exempt from the assault of traitors; but this revolt has dissipated this delusion, and warned us to provide all the safeguards indicated by experience as necessary to maintain the Union. Among the most important is the resumption by the Government of the great sovereign function of regulating the currency and giving to it uniformity and nationality. Such was clearly the intention of the Constitution. The Government has, by the Constitution, the exclusive power 'to regulate commerce with foreign nations, and among the several States.' But commerce is regulated mainly by money, and by it all interstate and international exchanges of products are made. If the currency is redundant, prices rise, exports are diminished; and the reverse follows with a contracted circulation. But banks inflate or restrict the currency at their pleasure, and thus control prices, commerce, exports, imports, and revenue. But they also destroy or depreciate the money of the Government, and deprive it of a vital power. Thus, the nation issues treasury notes, and makes them a legal tender: the banks immediately make such notes the basis of bank issues, in the ratio of three to one, and the whole currency necessarily becomes redundant and depreciated; and thus this essential power of the Government is controlled by the States, and, for all practical purposes, annihilated.
Chief Justice Marshall, in delivering the unanimous opinion of the Supreme Court of the United States (4 Wheaton 193), said: 'Wherever the terms in which a power is granted to Congress, or the nature of the power require that it should be exercised exclusively by Congress, the subject is as completely taken from the State Legislatures as if they had been forbidden to act on it.' Now, it has been decided by the Supreme Court of the United States (9 Wheaton 1) that, this power to regulate commerce extends to the land, as well as to the water, that it includes intercourse and navigation, and vessels, as vehicles of commerce, that it includes an embargo which is prohibitory, that this power is 'EXCLUSIVELY vested in Congress,' and 'no part of it can be exercised by a State.' Now, the question, whether the notes of a State bank, issued on the authority of a State, and designed to circulate as money, conflicts with this clause of the Constitution, has never been decided by the Supreme Court of the United States. This is a new and momentous question, never yet adjudicated by the Supreme Court; but how they would now decide that point, with the light thrown upon it by this rebellion, I cannot doubt.
The Government also has the sole power to lay and collect duties, which 'shall be uniform throughout the United States,' and the States are prohibited from exercising this authority. But this power also is in fact controlled by the banks, and the revenue from imports increased or diminished, according to their action. Indeed, they can modify or repeal tariffs at their pleasure, for, they have only to inflate the circulation, and prices rise here to the extent of the duties, and the tariff becomes inoperative. Of all the branches of our industry, the manufacturing is injured most by a redundant currency, limiting our fabrics to a partial supply at home, and driving them from the foreign market. Give us a sound, stable, uniform currency, sufficient but not redundant, and our skilled, educated, and intelligent labor will, in time, defy all competition. But the banks, as now conducted, are the great enemies of American industry.
The Government has also the sole power 'to coin money, regulate the value thereof,' etc. But the banks now regulate its value by controlling prices, by substituting their money for coin, and by expelling it from the country at their pleasure. Recollect, these powers over commerce and money are exclusive, not concurrent, so adjudicated, and the Constitution, in delegating them exclusively to the Government, withheld them altogether from the States. The conceded fact that these powers are exclusive, proves that the States cannot, by any instrumentality, directly or indirectly, control their exercise. An exclusive authority necessarily forbids any control or interference. But there are express prohibitions in the Constitution as well as grants. That instrument declares that 'no State shall emit bills of credit.' The State itself cannot emit circulating paper: how then can it authorize this to be done by a State corporation, which is the mere creature of a State law? The State cannot authorize its Governor to issue such paper: how then can it direct a cashier, deriving all his power only from a State law, to do the same thing? Qui facit per alium, facit per se, and this fundamental maxim of law and reason is violated when a State does through any instrumentality, created by it, what the State cannot do itself.
It is true that a majority of the Supreme Court of the United States, in 11 Peters 257, did decide that the Bank of the Commonwealth of Kentucky did not violate that clause of the Constitution forbidding States to 'emit bills of credit,' but Justice Story, in his dissenting opinion, said: 'When this cause was formerly argued before this court, a majority of the judges who then heard it were decidedly of opinion that the act of Kentucky establishing this bank was unconstitutional and void, as amounting to an authority to emit bills of credit, for and on behalf of the State, within the prohibition of the Constitution of the United States. In principle, it was thought to be decided by the case of Craig v. the State of Missouri (4 Peters 410). Among that majority was the late Chief Justice Marshall.' This decision, then, in the case of the Bank of Kentucky, is overthrown, as an authority, by the fact that it was against the decision of the Supreme Court in a former case, and against the opinion of a majority of the court in that very case before the death of Chief Justice Marshall. In delivering the opinion of the court in the Missouri case (4 Peters 410), Chief Justice Marshall defined what is that bill of credit which a State cannot emit. He says: 'If the prohibition means anything, if the words are not empty sounds, it must comprehend the emission of any paper medium by a State Government, for the purpose of common circulation.' And he also says: 'Bills of credit signify a paper medium, intended to circulate between individuals, and between Government and individuals, for the ordinary purposes of society.' That the notes of the Bank of Kentucky came within this definition and decision, is clearly stated by Justice Story. In that case also it was expressly decided, that if the issues be unconstitutional, the notes given for the loan of them ARE VOID. It is said, however, that the bills are issued by a bank, not by the State; but the bank is created by the State, and authorized by the State to issue these notes, to circulate as money. In the language of Chief Justice Marshall, in this case, 'And can this make any real difference? Is the proposition to be maintained that the Constitution meant to prohibit names and not things?' On this subject, Justice Story says: 'That a State may rightfully evade the prohibitions of the Constitution by acting through the instrumentality of agents in the evasion, instead of acting in its own direct name, is a doctrine to which I can never subscribe,' etc. I am conscious that Justice Story also said in the same case, arguendo: 'the States may create banks as well as other corporations, upon private capital; and, SO FAR AS THIS PROHIBITION IS CONCERNED, may rightfully authorize them to issue bank bills or notes as currency, subject always to the control of Congress, whose powers extend to the entire regulation of the currency of the country.' It will be observed, that Justice Story gives no opinion as to whether the issues of such banks are constitutional, whether they conflict or not with the power of Congress to regulate coin or commerce. He only says (and the limitation is most significant), they do not violate the prohibition as to bills of credit (from which I dissent); but he does declare that to Congress belongs 'the entire regulation of the currency.' Now this power must rest on the authority of Congress to regulate coin and commerce. But these powers, we have seen, were not concurrent, but exclusive; and, in the language of Chief Justice Marshall, in delivering the unanimous opinion of the Supreme Court in the case before quoted from 4 Wheaton 193, as to any such power that 'should be exercised exclusively by Congress, the subject is as completely taken from the State Legislature as if they had been forbidden to act on it.' All then who agree that Congress has 'the entire regulation of the currency,' must admit that all banks of issue incorporated by States are unconstitutional, not because such issues are bills of credit, but because they violate the exclusive authority of Congress to regulate commerce, coin, and its value. I repeat, that while this question has never been adjudicated by the Supreme Court, yet, if their decision in fourth and ninth Wheaton is maintained, such bank issues are clearly unconstitutional. It is clear, also, whatever may be the case of bank issues, based only 'upon private capital,' or, in the language of Judge Story, 'if the corporate stock, and that only by the charter, is made liable for the debts of the bank,' yet, if the bank issues are based on the 'funds' or 'credit' of the State, such issues do violate the prohibition against bills of credit. Such bank issues, then, as are furnished and countersigned by State officers, acting under State laws, and are secured by the deposit with the State of its own stock, are most clearly unconstitutional.