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legal currency of the country and in his people, instead of being kept till it is own possession pursues without loss the needed for their use, is, in consequence of current of his business. The government, this authority, a fund on which discounts placed in the situation of the former, is are made for the profit of those who hapinvolved in embarrassments it would not pen to be owners of stock in the banks have suffered had it pursued the course selected as depositories. The supposed of the latter. These embarrassments are, and often exaggerated advantages of such moreover, augmented by those salutary a boom will always cause it to be sought and just laws which forbid it to use a for with avidity. I will not stop to condepreciated currency, and by so doing take sider on whom the patronage incident to from the government the ability which it is to be conferred. Whether the selecindividuals have of accommodating their tion and control be intrusted to Congress transactions such a catastrophe. or to the executive, either will be sub
A system which can in a time of pro- jected to appeals made in every form found peace, when there is a large revenue which the sagacity of interest can suggest. laid by, thus suddenly prevent the ap- The banks under such a system are stimuplication and the use of the money of the lated to make the most of their fortunate people in the manner and for the objects acquisition; the deposits are treated as an they have directed cannot be wise; but increase of capital; loans and circulation who can think without painful reflection are rashly augmented, and when the public that under it the same unforeseen events exigencies require a return it is attended might have befallen us in the midst of a with embarrassments not provided for nor war and taken from us at the moment foreseen. Thus banks that thought themwhen most wanted the use of those very selves most fortunate when the public means which were treasured up to pro- funds were received find themselves most mote the national welfare and guard our embarrassed when the season of payment national rights? To such embarrassments suddenly arrives. and to such dangers will this government Unfortunately, too, the evils of the sysbe always exposed while it takes the tem are not limited to the banks. It moneys raised for and necessary to the stimulates a general rashness of enterpublic service out of the hands of its own prise and aggravates the fluctuations of officers and converts them into a commerce and the currency. This result right of action against corporations in- was strikingly exhibited during the opertrusted with the possession of them. Norations of the late deposit system, and escan such results be effectually guarded pecially in the purchases of public lands. against in such a system without invest. The order which ultimately directed the ing the executive with a control over the payment of gold and silver in such purbanks themselves, whether State or na- chases greatly checked, but could not tional, that might with reason be ob- altogether prevent, the evil. Specie was jected to. Ours is probably the only gov- indeed more difficult to be procured than ernment in the world that is liable in the the notes which the banks could themmanagement of its fiscal concerns to oc- selves create at pleasure; but still, being currences like these.
obtained from them as a loan and returned But this imminent risk is not the only as a deposit, which they were again at danger attendant on the surrender of the liberty to use, it only passed round the public money to the custody and control circle with diminished speed. This operof local corporations. Though the ob- ation could not have been performed had ject is aid to the treasury, its effect may the funds of the government gone into be to introduce into the operations of the the treasury to be regularly disbursed, government influences the most subtle, and not into banks to be loaned out founded on interests the most selfish. for their own profit while they were per
The use by the banks, for their own mitted to substitute for it a credit in acbenefit, of the money deposited with them count. has received the sanction of the govern- In expressing these sentiments I desire ment from the commencement of this con- not to undervalue the benefits of a salunection. The money received from the tary credit to any branch of enterprise.
The eredit bestowed on probity and indus- possession against accident, violence, or try is the just reward of merit and an fraud. The assertion that they are honorable incentive to further acquisi- must assume that a vault in a bank is tion. None oppose it who love their coun- stronger than a vault in the treasury, and try and understand its welfare. But when that directors, cashiers, and clerks not it is unduly encouraged; when it is made selected by the government nor under its to inflaine the public mind with the temp- control are more worthy of confidence than tations of sudden and unsubstantial officers selected from the people and rewealth; when it turns industry into paths sponsible to the government officers that lead sooner or later to disappoint- bound by official oaths and bonds for a ment and distress, it becomes liable to faithful performance of their duties, and censure and needs correction. Far from constantly subject to the supervision of belping probity and industry, the ruin to Congress. which it leads falls most severely on the The difficulties of transfer and the aid great laboring classes, who are thrown heretofore rendered by banks have been suddenly out of employment, and by the less than is usually supposed. The actual failure of magnificent schemes never in- accounts show that by far the larger portended to enrich them are deprived in a tion of payments is made within short or moment of their only resource. Abuses convenient distances from the places of of credit and excesses in speculation will collection; and the whole number of war. happen in despite of the most salutary rants issued at the treasury in the year laws; no government, perhaps, can alto- 1834–a year the result of which will, get her prevent them. but surely every it is believed, afford a safe test for the government can refrain from contributing future-fell short of 5,000, or an average the stimulus that calls them into life. of less than one daily for each State; in
Since, therefore, experience has shown the city of New York they did not averthat to lend the public money to the local age more than two a day, and at the city hanks is hazardous to the operations of oi Washington only four. the government, at least of doubtful bene- The difficulties heretofore existing are, fit to the institutions themselves, and moreover, daily lessened by an increase in productive of disastrous derangement in the cheapness and facility of communithe business and currency of the country, cation, and it may be asserted with conis it the part of wisdom again to renew fidence that the necessary transfer, as well the connection?
as the safe-keeping and disbursements of It is true that such an agency is in the public moneys, can be with safety and many respects convenient to the treas- convenience accomplished through the ury. but it is not indispensable. A limi- agencies of treasury officers. This opintation of the expenses of the government ion has been in some degree confirmed by to its actual wants, and of the revenue to actual experience since the discontinuance those expenses, with convenient means for of the banks as fiscal agents in May last its prompt application to the purposes for period which from the embarrassments which it was raised, are the objects which in commercial intercourse presented obstawe should seek to accomplish. The col. cles as great as any that may be hereafter lection, safe-keeping. transfer, and dis- apprehended. bursement of the public money can, it is The manner of keeping the public money believed, be well managed by officers of the since that period is fully stated in the government. Its collection, and to a great report of the Secretary of the Treasury. extent its disbursement also, have indeed That officer also suggests the propriety of been hitherto conducted solely by them, assigning by law certain additional duties neither national nor State banks, when to existing establishments and officers employed, being required to do more than which, with the modifications and safeheep it safely while in their custody, and guards referred to by him, will, he thinks. transfer and pay it in such portions and enable the department to continue to perat such times as the treasury shall direct. form this branch of the public service
Surely banks are not more able than the without any material addition either to gorernment to secure the money in their their number or to the present expense. The extent of the business to be trans- has hitherto existed between the governacted has already been stated; and in re- ment and banks offer sufficient advantages spect to the amount of money with which to justify the necessary expenses. If the the officers employed would be intrusted object to be accomplished is deemed imat any one time, it appears that, assum- portant to the future welfare of the couning a balance of $5,000,000 to be at all try, I cannot allow myself to believe that times kept in the treasury, and the whole the addition to the public expenditure of of it left in the hands of the collectors comparatively so small an amount as will and receivers, the proportion of each be necessary to effect it will be objected would not exceed an average of $30,000; to by the people. but that, deducting $1,000,000 for the It will be seen by the report of the use of the mint and assuming the remain- Postmaster-General herewith communiing $4,000,000 to be in the hands of cated that the fiscal affairs of that depart. one-half of the present number of officers ment have been successfully conducted -a supposition deemed more likely to cor- since May last upon the principle of dealrespond with the fact—the sum in the ing only in the legal currency of the Unithands of each would still be less than ed States, and that it needs no legislation the amount of most of the bonds now to maintain its credit and facilitate the taken from the receivers of public money. management of its concerns, the existing Every apprehension, however, on the sub- laws being, in the opinion of that officer, ject, either in respect to the safety of the ample for those objects. money or the faithful discharge of these Difficulties will doubtless be encountered fiscal transactions, may, it appears to me, for a season and increased services rebe effectually removed by adding to the quired from the public functionaries; such present means of the treasury the estab- are usually incident to the commencement lishment by law at a few important of every system, but they will be greatly points of offices for the deposit and dis- lessened in the progress of its operations. bursement of such portions of the public The power and influence supposed to be
as cannot with obvious safety connected with the custody and disburseand convenience be left in the possession ment of the public money are topics on of the collecting officers until paid over by which the public mind is naturally, and them to the public creditors. Neither with great propriety, peculiarly sensitive. the amounts retained in their hands nor Much has been said on them in reference those deposited in the offices would in an to the proposed separation of the governordinary condition of the revenue be larger ment from the banking institutions; and in most cases than those often under the surely no one can object to any appeals control of disbursing officers of the army or animadversions on the subject which and navy, and might be made entirely safe are consistent with facts and evince a by requiring such securities and exercis- proper respect for the intelligence of the ing such controlling supervision as Con- people. If a chief magistrate may be algress may by law prescribe. The prin- lowed to speak for himself on such a point, cipal officers whose appointments would I can truly say that to me nothing would become necessary under this plan, taking be more acceptable than the withdrawal the largest number suggested by the Sec. from the executive, to the greatest pracretary of the Treasury, would not exceed ticable extent, of all concerns in the custen, nor the additional expenses, at the tody and disbursement of the public revsame estimate, $60,000 a year.
enue; not that I would shrink from any There can be no doubt of the obligations responsibility cast upon me by the duties of those who are intrusted with the affairs of my office, but because it is my firm beof government to conduct them with as lief that its capacity for usefulness is in little cost to the nation as is consistent no degree promoted by the possession of with the public interest; and it is for any patronage not actually necessary to Congress, and ultimately for the people, the performance of those duties. But unto decide whether the benefits to be de- der our present form of government the inrived from keeping our fiscal concerns tervention of the executive officers in the apart and severing the connection which custody and disbursement of the public
money seems to be unavoidable; and be there equal room for such supervision and fore it can be admitted that the influence publicity in a connection with banks, actand power of the executive would be in. ing under the shield of corporate immunicreased by dispensing with the agency of ties and conducted by persons irresponsible banks the nature of that intervention in to the government and the people? It is such an agency must be carefully regard- believed that a considerate and candid ined, and a comparison must be instituted vestigation of these questions will result between its extent in the two cases. in the conviction that the proposed plan
The revenue can only be collected by offi- is far less liable to objection on the score cers appointed by the President with the of executive patronage and control than advice and consent of the Senate. The any bank agency that has been or can be publie moneys in the first instance must devised. therefore in all cases pass through hands With these views I leave to Congress selected by the executive. Other officers the measures necessary to regulate in the appointed in the same way, or, as in some present emergency the safe-keeping and cases, by the President alone, must also transfer of the public moneys. In the perbe intrusted with them when drawn for formance of constitutional duty I have the purpose of disbursement. It is thus stated to them without reserve the result seen that even when banks are employed of my own reflections. The subject is of the public funds must twice pass through great importance, and one on which we the hands of executive officers. Besides can scarcely expect to be as united in senthis, the head of the Treasury Department, timent as we are in interest. It deserves who also holds office at the pleasure of the a full and free discussion, and cannot fail President, and some other officers of the to be benefited by a dispassionate comsame department, must necessarily be in- parison of opinions. Well aware myself vested with more or less power in the of the duty of reciprocal concession selection, continuance, and supervision of among the co-ordinate branches of the the banks that may be employed. The government, I can promise a reasonable question is then narrowed to the single spirit of co-operation, so far as it can be point whether in the intermediate stage indulged in without the surrender of conbetween the collection and disbursement stitutional objections which I believe to of the public money the agency of banks be well founded. Any system that may be is necessary to avoid a dangerous extension adopted should be subjected to the fullest of the patronage and influence of the ex- legal provision, so as to leave nothing to ecutive. But is it clear that the connec- the executive but what is necessary to the tion of the executive with powerful discharge of the duties imposed on him; moneyed institutions, capable of minister and whatever plan may be ultimately esing to the interests of men in points tablished, my own part shall be so diswhere they are most accessible to cor- charged as to give to it a fair trial and ruption, is less liable to abuse than his the best prospect of success. constitutional agency in the appointment
The character of the funds to be reand control of the few public officers re- ceived and disbursed in the transactions quired by the proposed plan? Will the of the government likewise demands your public money when in their hands be nec- most careful consideration. essarily exposed to any improper inter- There can be no doubt that those who ference on the part of the executive? framed and adopted the Constitution. havMay it not be hoped that a prudent fear ing in immediate view the depreciated of public jealousy and disapprobation in paper of the Confederacy—of which $500 a matter so peculiarly exposed to them in paper were at times only equal to will deter him from any such interference, $1 in coin-intended to prevent the recureven if higher motives be found inoper- rence of similar evils, so far at least as ative? May not Congress so regulate by related to the transactions of the new govlaw the duty of those officers and subject ernment. They gave to Congress express it to such supervision and publicity as to powers to coin money and to regulate the prevent the possibility of any serious abuse value thereof and of foreign coin; they on the part of the executive? And is refused to give it power to establish cor
porations—the agents then as now chiefly paper had become so apparent that even employed to create a paper currency; they before the catastrophe I had resolved not prohibited the States from making any- to interfere with its operation. Congress thing but gold and silver a legal tender in is now to decide whether the revenue shall payment of debts; and the first Congress continue to be so collected or not. directed by positive law that the revenue receipt into the treasury of bankshould be received in nothing but gold and notes not redeemed in specie on demand silver.
will not, I presume, be sanctioned. It Public exigency at the outset of the gov. would destroy without the excuse of war ernment, without direct legislative author- or public distress that equality of impost ity, led to the use of banks as fiscal aids and identity of commercial regulations to the treasury.
It admitted deviation which lie at the foundation of our confrom the law; at the same period and un- federacy, and would offer to each State der the same exigency, the Secretary of a direct temptation to increase its foreign the Treasury received their notes in pay. trade by depreciating the currency rement of duties. The sole ground on which ceived for duties in its ports. Such a the practice thus commenced was then or proceeding would also in a great degree has since been justified is the certain, im- frustrate the policy so highly cherished mediate, and convenient exchange of such of infusing into our circulation a larger notes for specie. The government did, in- proportion of the precious metals—a poldeed, receive the inconvertible notes of icy the wisdom of which none can doubt, State banks during the difficulties of war, though there may be different opinions as and the community submitted without to the extent to which it should be car
murmur to the unequal taxation and ried. Its results have been already too multiplied evils of which such a course auspicious and its success is too closely was productive. With the war this in- interwoven with the future prosperity of dulgence ceased, and the banks were the country to permit us for a moment to obliged again to redeem their notes in contemplate its abandonment. We have gold and silver. The treasury, in accord- seen under its influence our specie augance with previous practice, continued to inented beyond $80,000,000, coindispense with the currency required by the age increased so as to make that of gold act of 1789, and took the notes of banks amount between August, 1834, and Dein full confidence of their being paid in cember, 1836, to $10,000,000, exceeding specie on demand; and Congress, to guard the whole coinage at the mint during the against the slightest violation of this thirty-one previous years. principle, have declared by law that if The prospect of further improvement notes are paid in the transactions of the continued without abatement until the government it must be under such cir- moment of the suspension of specie paycumstances as to enable the holder to con- ments. This policy has now, indeed, been vert them into specie without depreciation suddenly checked, but is still far from or delay.
being overthrown. Amid all conflicting Of my own duties under the existing theories, one position is undeniable—the laws, when the banks suspended specie precious metals will invariably disappear payments, I could not doubt. Directions when there ceases to be a necessity for were immediately given to prevent the re- their use a circulating medium. It ception into the treasury of anything but was in strict accordance with this truth gold and silver, or its equivalent, and that, while in the month of May last they every practicable arrangement was made were everywhere seen and were current for to preserve the public faith by similar or all ordinary purposes, they disappeared equivalent payments to the public credit- from circulation the moment the payment ors. The revenue from lands had been of specie was refused by the banks and the for some time substantially so collected community tacitly agreed to dispense with under the order issued by directions of its employment. Their place was supplied my predecessor. The effects of that order by a currency exclusively of paper, and in had been so salutary and its forecast in many cases of the worst description. Alregard to the increasing insecurity of bank- ready are the bank-notes now in circula