and by other facilities for the acquisi- detrimental alike to the industry, the resources, and the morals of our people.

tion and enlargement of credit. At the commencement of the year 1834 the bank- It was so impossible that such a state ing capital of the United States, including of things could long continue that the that of the national bank, then existing, prospect of revulsion was present to the amounted to about $200,000,000, the bank- minds of considerate men before it actunotes then in circulation to about $95,- ally came. None, however, had correct000,000, and the loans and discounts of ly anticipated its severity. A concurrence the banks to $324,000,000. Between that of circumstances inadequate of themselves time and Jan. 1, 1836, being the latest to produce such wide-spread and calamiperiod to which accurate accounts have tous embarrassments tended so greatly been received, our banking capital was in to aggravate them that they cannot creased to more than $251,000,000, our be overlooked in considering their history. paper circulation to more than $140,- Among these may be mentioned, as most 000.000, and the loans and discounts to prominent, the great loss of capital susmore than $457,000,000. To this vast tained by our commercial emporium in increase are to be added the many the fire of December, 1835-a loss the millions of credit acquired by means of effects of which were underrated at the foreign loans, contracted by the States time because postponed for a season by and State institutions, and, above all, by the great facilities of credit then existing; the lavish accommodations extended by the disturbing effects in our commercial foreign dealers to our merchants. cities of the transfers of the public moneys. required by the deposit law of June, 1836, and the measures adopted by the foreign creditors of our merchants to reduce their debts and to withdraw from the United States a large portion of our specie.

It

The consequences of this redundancy of credit and of the spirit of reckless speculation engendered by it were a foreign debt contracted by our citizens estimated in March last at more than $30,000,000; the extension to traders in the interior of However unwilling any of our citizens our country of credits for supplies greatly may heretofore have been to assign to beyond the wants of the people; the in- these causes the chief instrumentality in vestment of $39.500.000 in unproductive producing the present state of things, the public lands in the years 1835 and 1836, developments subsequently made the actwhile in the preceding year the sales ual condition of other commercial counamounted to only $4.500.000; the cre- tries must, as it seems to me, dispel all ation of debts, to an almost count- remaining doubts upon the subject. less amount, for real estate in ex has since appeared that evils similar to isting or anticipated cities and villages, those suffered by ourselves have been exequally unproductive, and at prices now perienced in Great Britain, on the Contiseen to have been greatly disproportion- nent, and, indeed, throughout the comate to their real value; the expenditure of mercial world, and that in other countries immense sums in improvements which in as well as in our own they have been many cases have been found to be ruin- uniformly preceded by an undue enlargeously improvident; the diversion to other ment of the boundaries of the trade, pursuits of much of the labor that should prompted, as with us, by unprecedented have been applied to agriculture, thereby expansions of the systems of credit. contributing to the expenditure of large reference to the amount of banking capisums in the importation of grain from tal and the issues of paper credits out Europe-an expenditure which, amount in circulation in Great Britain, by banks ing in 1834 to about $250,000, was in the and in other ways, during the years 1834. first two quarters of the present year in 1835, and 1836, will show an augmentation creased to more than $2.000.000; and of the paper currency there as much disfinally, without enumerating other inju- proportioned to the real wants of trade rious results, the rapid growth among all as in the United States. With this reclasses, and especially in our great com- dundancy of the paper currency there mercial towns, of luxurious habits founded arose in that country also a spirit of too often on merely fancied wealth, and adventurous speculation embracing the

A

They are: to regulate by law the safekeeping, transfer, and disbursement of the public moneys; to designate the funds to

whole range of human enterprise. Aid people point out the objects which call was profusely given to projected improve- for your immediate attention. ments; large investments were made in foreign stocks and loans; credits for goods were granted with unbounded liberality to merchants in foreign countries; be received and paid by the government; and all the means of acquiring and employing credit were put in active operation and extended in their effects to every department of business and to every quarter of the globe. The reaction was proportioned in its violence to the extraordinary character of the events which preceded it. The commercial community of Great Britain were subjected to the greatest difficulties, and their debtors in this country were not only suddenly deprived of accustomed and expected credits, but called upon for payments which in the actual posture of things here could only be made through a general pressure and at the most ruinous sacrifices.

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 constitu tional 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 theretofore 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

operations of the government from those of individuals or corporations.

In view of these facts it would seem impossible for sincere inquirers after truth to resist the conviction that the causes of the revulsion in both countries have been substantially the same. Two nations, the most commercial in the world, the United States, to separate the fiscal enjoying but recently the highest degree of apparent prosperity and maintaining with each other the closest relations are suddenly, in a time of profound peace and without any great national disaster, arrested in their career and plunged into a state of embarrassment and distress. In both countries we have witnessed the same redundancy of paper money and other facilities of credit; the same spirit of speculation: the same partial successes; the same difficulties and reverses, and at length nearly the same overwhelming catastrophe. The most material difference between the results in the two countries has only been that with us there has also occurred an extensive derangement in the fiscal affairs of the federal and State governments, occasioned by the suspension of specie payments by the banks.

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

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 cannot 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 forgot ten 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 in

fluenced by the same motives, will be ticipate the proceeds of property actually equally ready to stimulate extravagance transmitted. Bills of this description are of enterprise by improvidence of credit. highly useful in the movements of trade How strikingly is this conclusion sustain- and well deserve all the encouragement ed by experience! The Bank of the Unit- which can rightfully be given to them. ed States, with the vast powers conferred Another class is made up of bills of on it by Congress, did not or could not exchange not drawn to transfer actual prevent former and similar embarrass- capital nor on the credit of property ments, nor has the still greater strength transmitted, but to create fictitions capiit has been said to possess under its pres- tal, partaking at once of the character of ent charter enabled it in the existing notes discounted in bank and of bankemergency to check other institutions or notes in circulation, and swelling the mass even to save itself. In Great Britain where of paper credits to a vast extent in the it has been seen the same causes have been most objectionable manner. These bills attended with the same effects, a national have formed for the last few years a large bank possessing powers far greater than proportion of what are termed the domesare asked for by the warmest advocates of tic exchanges of the country, serving as such an institution here has also proved the means of usurious profit and constitutunable to prevent an undue expansion of ing the most unsafe and precarious paper credit, and the evils that flow from it. in circulation. This species of traffic, inNor can I find any tenable ground for stead of being upheld, ought to be disthe re-establishment of a national bank in countenanced by the government and the the derangement alleged at present to people. 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 exchanges 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 extite among the community a more diligent inquiry into the character of those operations of trade towards which it is desired to extend such peculiar favors.

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 faciliThe various transactions which bear ties afforded by the Post-office Department. the name of domestic exchanges differ es. As justly might it be called on to provide sentially in their nature, operation, and for the transportation of their merutility. One class of them consists of chandise. These are operations of trade. bills of exchange drawn for the purpose They ought to be conducted by those who of transferring actual capital from one are interested in them in the same manner part of the country to another, or to an- that the incidental difficulties of other

pursuits are encountered by other classes irreconcilably opposed to that measure; of citizens. Such aid has not been deemed they consider such a concentration of necessary in other countries. Through power dangerous to their liberties, and out Europe the domestic as well as the many of them regard it as a violation of foreign exchanges are carried on by private the Constitution. This collision of opinion houses, often, if not generally, without has doubtless caused much of the embarthe assistance of banks; yet they extend rassment to which the commercial transthroughout distinct sovereignties, and far actions of the country have lately been exceed in amount the real exchanges of exposed. Banking has become a political the United States. There is no reason topic of the highest interest, and trade why our own may not be conducted in the has suffered in the conflict of parties. A same manner with equal cheapness and speedy termination of this state of things, safety. Certainly this might be accom- however desirable, is scarcely to be explished if it were favored by those most pected. We have seen for nearly half a deeply interested; and few can doubt that century that those who advocate a natheir own interest, as well as the general tional bank, by whatever motive they may welfare of the country, would be promoted be influenced, constitute a portion of our by leaving such a subject in the hands of community too numerous to allow us to those to whom it properly belongs. A sys- hope for an early abandonment of their tem founded on private interest, enter- favorite plan. On the other hand, they prise, and competition, without the aid must indeed form an erroneous estimate of legislative grants or regulations by of the intelligence and temper of the law, would rapidly prosper; it would be American people who suppose that they free from the influence of political agita- have continued on slight or insufficient tion and extend the same exemption to grounds their perversing opposition to trade itself, and it would put an end to such an institution, or that they can be those complaints of neglect, partiality, in- induced by pecuniary pressure or by any justice, and oppression, which are the un- other combination of circumstances to avoidable results of interference by the surrender principles they have so long government in the proper concerns of in- and so inflexibly maintained. dividuals. 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 cannot be concealed that there exist 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

My own views of the subject are unchanged. They have been repeatedly and unreservedly announced to my fellow-citizens, who with full knowledge of them conferred upon me the two highest offices of the government. On the last of these occasions I felt it due to the people to apprise them distinctly that in the event of my election I would not be able to cooperate in the re-establishment of a national bank. To these sentiments I have now only to add the expression of an increased conviction that the re-establishment of such a bank in any form, while it would not accomplish the beneficial purpose promised by its advocates, would impair the rightful supremacy of the popular will, injure the character and diminish the influence of our political system, and bring once more into existence a concentrated moneyed power, hostile to the spirit and threatening the permanency of our republican institutions.

Local banks have been employed for the deposit and distribution of the revenue at all times partially and on three differ

ent occasions exclusively: First, anterior by early necessities, the practice of emto the establishment of the first bank of ploying banks was in truth from the bethe United States; secondly, in the inter- ginning more a measure of emergency than val between the termination of that in- of sound policy. When we started into stitution and the charter of its successor; existence as a nation, in addition to the and thirdly, during the limited period burdens of the new government we aswhich has now so abruptly closed. The sumed all the large but honorable load connection thus repeatedly attempted of debt which was the price of our liberty; proved unsatisfactory on each successive but we hesitated to weigh down the infant occasion, notwithstanding the various industry of the country by resorting to measures which were adopted to facilitate adequate taxation for the necessary revor insure its success. On the last occasion, enue. The facilities of banks, in return in the year 1835, the employment of the for the privileges they acquired, were State banks was guarded especially, in promptly offered, and perhaps too readily every way which experience and caution received by an embarrassed treasury. Durcould suggest. Personal security was re- ing the long continuance of a national quired for the safe-keeping and prompt debt and the intervening difficulties of a payment of the moneys to be received, and foreign war the connection was continued full returns of their condition were from from motives of convenience; but these time to time to be made by the deposi- causes have long since passed away. We tories. In the first stages the measure have no emergencies that make banks necwas eminently successful, notwithstanding essary to aid the wants of the treasury; the violent opposition of the Bank of the we have no load of national debt to proUnited States, and the unceasing efforts vide for, and we have on actual deposit a made to overthrow it. The selected banks large surplus. No public interest, thereperformed with fidelity and without any fore, now requires the renewal of a conembarrassment to themselves or to the nection that circumstances have dissolved. community their engagements to the gov- The complete organization of our governernment, and the system promised to be ment, the abundance of our resources, the permanently useful; but when it becomes general harmony which prevails between necessary, under the act of June, 1836, to the different States and with foreign withdraw from them the public money powers, all enable us now to select the for the purpose of placing it in additional system most consistent with the Constiinstitutions or of transferring it to the tution and most conducive to the public States, they found it in many cases in- welfare. Should we, then, connect the convenient to comply with the demands of treasury for a fourth time with the local the treasury, and numerous and pressing banks, it can only be under a conviction applications were made for indulgence or that past failures have arisen from acrelief. As the instalments under the de- cidental, not inherent, defects. posit law became payable their own embarrassments and the necessity under which they lay of curtailing their discounts and calling in their debts increased the general distress, and contributed with other causes to hasten the revulsion in which at length they, in common with the other banks, were fatally involved.

Under these circumstances it becomes our solemn duty to inquire whether there are not in any connection between the government and banks of issue evils of great magnitude, inherent in its very nature and against which no precautions can effectually guard.

Unforeseen in the organization of the government and forced on the treasury

A danger difficult, if not impossible, to be avoided in such an arrangement is made strikingly evident in the very event by which it has now been defeated. A sudden act of the banks intrusted with the funds of the people deprives the treasury without fault or agency of the government, of the ability to pay its creditors in the currency they have by law a right to demand. This circumstance no fluctuation of commerce could have produced if the public revenue had been collected in the legal currency and kept in that form by the officers of the treasury. The citi zen whose money was in bank receives it back since the suspension at a sacrifice in its amount, while he who kept it in the