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and by other facilities for the acquisi- detrimental alike to the industry, the retion and enlargement of credit. At the sources, and the morals of our people. 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 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. The consequences of this redundancy of required by the deposit law of June, 1836, credit and of the spirit of reckless specu- and the measures adopted by the foreign lation engendered by it were a foreign creditors of our merchants to reduce their debt contracted by our citizens estimated debts and to withdraw from the United in March last at more than $30,000,000; States a large portion of our specie. 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 almost count- remaining doubts upon the subject. It 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. A 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 European 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

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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 They are: to regulate by law the safeforeign stocks and loans; credits for keeping, transfer, and disbursement of the goods were granted with unbounded liber- public moneys; to designate the funds to ality to merchants in foreign countries; be received and paid by the government; and all the means of acquiring and em- to enable the treasury to meet promptly ploying credit were put in active opera- every demand upon it; to prescribe the tion and extended in their effects to ev- terms of indulgence and the mode of settleery department of business and to every ment to be adopted, as well in collecting quarter of the globe. The reaction was from individuals the revenue that has acproportioned in its violence to the ex- crued as in withdrawing it from former traordinary character of the events which depositories; and to devise and adopt such preceded it. The commercial community further measures, within the constituof Great Britain were subjected to the tional competency of Congress, as will greatest difficulties, and their debtors in be best calculated to revive the enterprise this country were not only suddenly de- and to promote the prosperity of the prived of accustomed and expected cred- country. its, but called upon for payments which For the deposit, transfer, and disbursein the actual posture of things here could ment of the revenue, national and State only be made through a general pressure banks have always, with temporary and and at the most ruinous sacrifices. limited exceptions, been theretofore em

In view of these facts it would seem ployed; but although advocates of each impossible for sincere inquirers after system are still to be found, it is aptruth to resist the conviction that the parent that the events of the last few causes of the revulsion in both countries months have greatly augmented the dehave been substantially the same. Two sire, long existing among the people of nations, the most commercial in the world, the United States, to separate the fiscal enjoying but recently the highest degree operations of the government from those of apparent prosperity and maintaining of individuals or corporations. with each other the closest relations are Again to create a national bank as a suddenly, in a time of profound peace and fiscal agent would be to disregard the without any great national disaster, ar- popular will, twice solemnly and unrested in their career and plunged into a equivocally expressed. On no question of state of embarrassment and distress. In domestie policy is there stronger eviboth countries we have witnessed the same dence that the sentiments of a large maredundancy of paper money and other jority are deliberately fixed, and I can. facilities of credit; the same spirit of not concur with those who think they see speculation; the same partial successes; in recent events a proof that these senti. the same difficulties and reverses, and at ments are, or a reason that they should length nearly the overwhelming be, changed. catastrophe. The most material differ- Events similar in their origin and charence between the results in the two coun- acter have heretofore frequently occurred tries has only been that with us there has without producing any such change, and also occurred an extensive derangement in the lessons of experience must be forgotthe fiscal affairs of the federal and State ten if we suppose that the present overgovernments, occasioned by the suspension throw of credit would have been prevented of specie payments by the banks.

by the existence of a national bank. The history of these causes and ef. Proneness to excessive issues has ever fects in Great Britain and the United been the vice of the banking system-a States is substantially the history of the vice as prominent in national as in State revulsion in all other commercial coun- institutions. This propensity is as subtries.

servient to the advancement of private The present and visible effects of these interests in the one as in the other, and circumstances on the operations of the those who direct them both, being pringovernment and on the industry of the cipally guided by the same views and in

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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 fictitious 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 In transferring its funds from place to country or in the facilities it may be capa- place the government is on the same footble of affording them. Although ad- ing with the private citizen and may revantages of this sort were anticipated sort to the same legal means. It may do when the first Bank of the United States so through the medium of bills drawn by was created, they were regarded as an in- itself or purchased from others; and in cidental accommodation, not one which these operations it may, in a manner unthe federal government was bound or doubtedly constitutional and legitimate, could be called upon to furnish. This ac- facilitate and assist exchanges of individcommodation is now, indeed, after the uals founded on real transactions of trade. lapse of not many years, demanded from The extent to which this may be done and it as among its first duties, and an omis. the best means of effecting it are entitled sion to aid and regulate commercial ex- to the fullest consideration. This has changes is treated as a ground of loud been bestowed by the Secretary of the and serious complaint. Such results only Treasury, and his views will be submitted serve to exemplify the constant desire to you in his report. among some of our citizens to enlarge the But it was not designed by the Constipowers of the government and extend its tution that the government should assume control to subjects with which it should the management of domestic or foreign not interfere. They can never justify the exchange. It is indeed authorized to regcreation of an institution to promote such ulate by law the commerce between the objects. On the contrary, they justly ex- States and to provide a general standcite among the community a more diligent ard of value or medium of exchange in inquiry into the character of those oper- gold and silver, but it is not its province ations of trade towards which it is de- to aid individuals in the transfer of their sired to extend such peculiar favors. funds otherwise than through the facili

The 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

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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 their 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 My own views of the subject are unpart of the government to carry its legis. changed. They have been repeatedly and Jation in this respect further than was unreservedly announced to my fellow-cit. designed by the Constitution have in the izens, who with full knowledge of them end proved injurious, and have served conferred upon me the two highest offices only to convince the great body of the of the government. On the last of these people more and more of the certain dan- occasions I felt it due to the people to gers of blending private interests with apprise them distinctly that in the event the operations of public business; and of my election I would not be able to cothere is no reason to suppose that a repe- operate in the re-establishment of a natition of them now would be more suc- tional bank. To these sentiments I have cessful.

now only to add the expression of an inIt cannot be concealed that there ex- creased conviction that the re-establishist in our community opinions and feel- ment of such a bank in any form, while ings on this subject in direct opposition it would not accomplish the beneficial to each other. A large portion of them, purpose promised by its advocates, would combining great intelligence, activity, and impair the rightful supremacy of the influence, are no doubt sincere in their be- popular will, injure the character and lief that the operations of trade ought diminish the influence of our political systo be assisted by such a connection; they tem, and bring once more into existence a regard a national bank as necessary for concentrated moneyed power, hostile to this purpose, and they are disinclined to the spirit and threatening the permanency every measure that does not tend sooner of our republican institutions. or later to the establishment of such an Local banks have been employed for the institution. On the other hand, a ma- deposit and distribution of the revenue jority of the people are believed to be at all times partially and on three different 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 ral 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, there. performed 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 em- A danger difficult, if not impossible, to barrassments and the necessity under be avoided in such an arrangement is made which they lay of curtailing their dis- strikingly evident in the very event by counts and calling in their debts increased which it has now been defeated. A sudthe general distress, and contributed with den act of the banks intrusted with the other causes to hasten the revulsion in funds of the people deprives the treasury which at length they, in common with the without fault or agency of the governother banks, were fatally involved. ment, of the ability to pay its creditors

Under these circumstances it becomes in the currency they have by law a right our solemn duty to inquire whether there to demand. This circumstance no fluctuaare not in any connection between the gov. tion of commerce could have produced if ernment and banks of issue evils of great the public revenue had been collected in magnitude, inherent in its very nature the legal currency and kept in that form and against which no precautions can by the officers of the treasury. The citieffectually guard.

zen whose money was in bank receives it Unforeseen in the organization of the back since the suspension at a sacrifice in government and forced on the treasury its aniount, while he who kept it in the

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