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Juxe 20, 1834.]
companies, State banks, and numerous citizens of your cities, at that time presented to Congress for a renewal of the old bank charter, were now produced and read from the Clerk's table, without any notice to the House of the date they bore, every individual present would have no doubt left on his mind that they were prepared and signed at Philadelphia, or elsewhere, yesterday, or last week, and had immediate relation to the distress now falsely said to have been produced by the recent removal of the deposites. The very arguments and complaints which were urged upon Congress then, as reasons why the old bank charter should be renewed, are urged upon us now as reasons why the present bank charter should be renewed, with the single exception that nothing was said then, as now, in relation to the public deposites. That the House may see the more clearly these striking resemblances between that period and this, I beg to read from a few of the memorials presented to Congress during the years 1809, '10, and ’11, and which have remained on our files in one of the upper rooms of the Capitol, undisturbed and unexamined, for so many years. I read first from a memorial of the Chamber of Commerce of Philadelphia, in which, after stating that three-fourths of the capital stock of the bank was held by foreigners, the memorialists say: “From the collection of the bonds for duties at the Bank of the United States, it unavoidably results that there is in that bank a great and constant accumulation of the paper of the other banks. This cause, combined with its weight of capital and extensive deposites, has given to the Bank of the United States an obvious importance in the connexion with other banks, which now renders its continuance almost indispensable to their safety; for your memorialists are without fear of contradiction, when they assert that, if the Bank of the United States be dissolved, an effect extensively and deeply injurious will be fert by all the other banking institutions within the range of its operations. In their apprehension, it is impossible that the Bank of the United States should exact payment from its debtors, and close its concerns, without its producing all the evils of prostrated credit and general delinquency.” “To predict with certainty the extent of the evils which must inevitably flow from a dissolution of the bank, is beyond the power of your memorialists. They conceive that among these evils, however, may certainly be placed an extensive and aggravating loss by all persons interested in the banking associations of the country; a destructive disregard of punctuality in the performance of contracts, both towards the Government and the citizen; a wide-spreading bankruptcy, which will be felt by the commercial, manufacturing, and agricultural interests; a diffidence of the stability of Government, both at home and abroad, and a prostration of their confidence and credit, which have so happily and successfully administered to the enterprise and prosperity of the country.” I read next from a memorial of citizens from Philadelphia, presented to Congress on the 31st January, 1811; “That it is with increasing solicitude and the deepest concern that your memorialists reiterate their petition to Congress, for renewal of the charter of the Bank of the United States. With the extreme of anxiety have they awaited the decision of this most important question, and with real distress do they witness the ascendency of sentiments opposed to the continuance of the bank. Before a final determination shall, however, exclude all hope, they deem it their indispensable duty to lay before you a view of the distress which has already commenced, and of the wide-spreading ruin which has been but faintly anticipated, but the certainty of which is now plain to every eye, and to accompany this view with their renewed and urgent entreaties that this overwhelming mischief may yet be staid. It has become too plain to admit of
doubt with the most incredulous, that confidence and credit are intimately and essentially connected with the continuance of the Bank of the United States, and that, if they are prostrated by the dissolution of that institution, the country must experience, to its lasting reproach, and perhaps its incurable injury, a general disregard of pecuniary engagements. Your memorialists, therefore, cons' der it as a fact no longer doubtful or disputable, that if the bank be dissolved at the expiration of its present charter, and, in truth, unless the public confidence be speedily restored, universal distress and incalculable loss must and will prevail. From the pressing and peculiar exigencies of the time, brought about by a fear of the dissolution of the bank, and from a perfect persuasion of the near ap proach of all the evils which have been anticipated, your memorialists have deemed themselves bound to make this appeal to your wisdom, and to present it by a deputation of their fellow-citizens. This deputation, intimately acquainted with the situation, sentiments, and feelings of your memorialists, they respectfully request may be heard by counsel on this momentous subject. Finally, it is the earnest pressing prayer of your memorialists, that effect. ual means may be immediately adopted to restore public confidence, by a renewal of the charter of the Bank of the United States, for a term which shall assure its duration; or, if that be not granted, that the public suffering may be alleviated by a continuance of the institution for a period which will permit it gradually to close its concerns.” So that, it seems, committees bearing to the Capitol memorials representing the ruin and distress of the commercial cities at that time, as now, waited upon Congress with their complaints, and yet at that time the removal of the deposites constituted no part of the cause assigned for the distress complained of. I find next a memorial from the Bank of New York, presented to Congress January 8th, 1811, in which it is represented that “the demands already made upon State banks have pressed them to their utmost limits; and from these causes they will be utterly unable to supply, in any considerable degree, that aid which has hitherto been afforded by the Bank of the United States. The consequences must be very great individual distress and heavy losses, as well to the revenue as to all the moneyed institutions. The renewal of the charter of the Bank of the United States would render such reductions unnecessary; and, by relieving the apprehensions now excited through almost every class of the community, restore that confidence so essential to the system of public credit under which the United States have so much prospered.” I will trouble the House by reading a single other extract from one of these memorials; it is from the memorial of the Baltimore Insurance Company, dated 16th January, 1811. “A refusal to renew the charter of that institution, in the present inauspicious and deplorable state of our commerce,” your memorialists humbly apprehend, and they feel it their duty explicitly to state, as their unqualified opinion, that it will have the effect of producing a general destruction of commercial credit and confidence. But what, perhaps, in a national point of view, is still more to be dreaded, because its calamitous effects would not be confined to your cities, but would make its ravages into every quarter of the country, is the imminent jeopardy into which the whole banking system of the nation would be placed. The winding up of the Bank of the United States necessarily compels the drawing in of the funds of the State banks to such a degree as will produce innumerable failures, and involve your memorialists in irreparable losses.” - I might read from other memorials to which I have turned, upon the same subject, and presented to Congress about the same time, until I would fatigue the patience of the House. They are all of the same tone and tenor.
Against all this complaint of ruin, of prostration of credit, and of commercial and pecuniary distress, I have some evidences, collected from the documents of that period, now on our files, to which I wish also to call the attention of the House. And the first is a report submitted by Mr. Clay to the Senate of the United States on the 2d of March, 1811, as follows, viz.: “Your committee are happy to say that they learn, from a satisfactory source, that the apprehensions which were indulged as to the distress resulting from a non-renewal of the charter, are far from being realized in Philadelphia, to which their information has been confined. It was long since obvious that the vacuum in the circulation of the country, which was to be produced by the withdrawal of the paper of the Bank of the United States, would be filled by paper issuing from other banks. This operation is now actually going on; the paper of the Bank of the United States is rapidly returning, and that of other banks is taking its place. Their ability to enlarge their accommodations is proportionately enhanced; and when it shall be further increased by a removal into their vaults of those deposites which are in possession of the Bank of the United States, the injurious effects of a dissolution of the corporation will be found to consist in an accelerated disclosure of the actual condition of those who have been supported by the credit of others, but whose insolvent or tottering situation, known to the bank, has been concealed from the public at large.” We have heard much, during the present winter, of a declaration imputed to the President, “that those who trade on borrowed capital ought to break.” The same opinion, it seems, was, in substance, expressed by this committee of the Senate in 1811. The same committee were then further of opinion, as I am now, that the representations of distress were greatly exaggerated, if not unfounded; that the vacuum produced by the withdrawal of the paper of the Bank of the United States would be supplied by the paper of other banks; and that State banks were safe and suitable depositories of the public money. I find, also, on our files, a memorial from the patriotic citizens of Pittsburg, from which I will trouble the House by reading a few extracts: “After the Bank of the United States had enjoyed twenty years of prosperity, had divided, in that term, four million over six per centum, and had held in bondage thousands of our citizens, who dared not to act according to their consciences, from fear of offending the British stockholders and federal directors, we had hoped that they would have quietly closed their concerns, and waited for another turn of fortune, till other classes of citizens, of at least equal merit, had each shared their four millions; but we have seen, with indignation, a studicd delay in the collections of that bank, indicating a determination to gain a renewal under stress of weather; a studied pressure on individuals, and on State banks, in order to gain auxiliaries; and a studied memorial, containing, in smooth language, the most daring insults on the dignity and independence of a free people.” # * o
“The memorial next proceeds to associate the bank with the Government, claiming to be a necessary and indivisible part of it, showing the insufficiency of State banks to answer the dignified purposes of their institution; and, after repeating, for the tenth time, the awful calamities awaiting their dissolution, they commend the hard case of moneyed aristocracies, and of rich widows and orphans, interested in their stock, to the wisdom and justice of the Legislature. They again hold up the awful terrors of “a general derangement of credit,” and pray for a renewal of their charter.” * + * *
“Now, may it please the Congress, this bank memorial
is for a grant, worth to the stockholders six millions, and to federalism and British influence sixty millions; and if the memorial contained the truth, there could have been no occasion of presenting it; but you, in your wisdom and superior intelligence, would have humbly petitioned David Lenox, president, and the directors and stockholders of the United States Bank, to please to accept a renewal of their charter for eternity, or such shorter term as their honors should appoint.” * - o: “We regard the repeated alarms in the memorial as not only groundless, but as a kind of threatening, ill suited to your dignity and our independence.” " 4. “The bank memorial is a public declaration that the Government and people of the United States are held in duress by the memorialists, and that the continuance of our independence rests on their willingness to continue their bank operations. It contains an insulting history of favors to us, greater than their royal master ever urged upon the colonies. It declares that in the management of the power of the purse, for twenty years, it has done every thing for us, and has rendered itself necessary to our future existence. Its silent language is, “Though we fail to conquer you by the sword, we hold you suspended by the purse strings. We demand your gratitude for such use of our funds as we have condescended to permit you to pay for; and now, if the power is to be withdrawn from us, all your establishments of commerce, finance, agriculture, and the arts, will fall with us.” “This language is not from a band of patriots who undertook to aid the nation in the first struggles for selfgovernment, but of men who, by subtlety and intercession, obtained a charter, and who have become masters of the head-waters of corruption, through the ill-placed bounty of the first Congress. Their delay to close their affairs according to law was not for public good, but in preparation for a sudden onset upon a short session of your honorable body. Hence their well-timed subscriptions to some republican presses. Hence the silence of federal presses, lest discussion should awake in your constituents the spirit of 1776. Hence the artificial depression of stock, not in market, and the petitions from interested companies and individuals crowding upon you. Hence the thronging of your avenues, and the artful sounding of every Senator and member. Hence the intimations that a million and a quarter should be placed in your Treasury, as a consideration for the ruin of your constituents; and hence the shameless assertion, that our President, who gained his elevation by his able opposition to the charter of the bank, and other ruinous measures, is now in favor of renewal.” “The bank memorial, with its accompaniments, is an alarming commentary on the original charter. The actual depreciation of our silver and gold, by the United States Bank, is not to be compared with the attempts to depreciate the sterling virtue and republican integrity of our people.” All the representations of ruin and impending distress, of the inability of State banks to perform the offices of agents of Government, of derangement of currency, and of the necessity of a national regulator of currency, made by the old bank and its friends, did not convince the Congress of 1810, *11, that it was proper to grant a recharter. In that most important crisis, the Legislature of the Commonwealth of Pennsylvania came to the rescue of the constitution. Itesolutions were there adopted, and are now on our files, instructing her Senators and requesting her Representatives in Congrrss “to use every exertion in their power to prevent the charter of the Bank of the United States from being renewed, or any other bank from being chartered by Congress, designed to have operation within the jurisdiction of any State,” &c. Virginia, too, gave similar instructions to her Senators and Representatives in Congress, “to use their best ef
forts in opposing, by every means in their power, the renewal of the charter of the Bank of the United States.” The resolutions of Pennsylvania were presented to Con. gress on the 22d, and those of Virginia on the 26th of January, 1811. Congress refused to renew the charter; the old bank expired with the termination of its charter, and none of the evil consequences which had been anticipated, and were so confidently predicted by the bank and its friends, were found to follow. No distress, no ruin, no prostration of credit or of commerce, were found to exist. This bank expired, too, with its business extended up to its maximum point almost to the last hour of its existence. Even the minority of the Commit. tee of Ways and Means, in their counter report, at the present session, admit that that bank expired “with a circulation then flowing through the country greater than the maximum of its amount at any previous time, with the usual extent of deposites, public and private, in its vaults; with nearly all its canvass of every kind spread to the last hour of its voyage, and which the just and amicable relations subsisting between the administration and the bank made it safe to spread for the good of the country.” if this be so, why may not the same thing happen upon the termination of the charter of the present bank? There can be no reason why it should not go quietly out of existence with the termination of its charter, without producing any violent shock either upon the currency or the commercial prosperity of the country, unless it be the will of the bank, unnecessarily and wantonly, to use its immense power to inflict it, to induce thereby a general belief of the necessity of its continuance, and, if possible, procure a recharter. Should this be the determina. tion of its managers, it will be better to bear the temporary inconvenience which it may produce, rather than fasten upon the country a lasting evil. The House has decided, by such a majority (fifty-three) as renders it morally certain that that decision is not like. ly to be reversed, that the present bank ought not to be rechartered. They have decided that the present bank is not regarded now, as the old bank was not regarded in 1810, *11, either as an indispensable Government agent, or as a regulator of currency. No new bank has been recommended, for most obvious reasons: 1st. Because, by the terms of the present bank charter, no other bank could be created by Congress, to go into effect before the 4th of March, 1836, when that charter expires. 2d. No new bank could furnish a remedy for the commercial distress and embarrassment, real or pretended, complained of; because that distress or embarrassment, whether real or imaginary, must have run its course and passed away before any new bank could commence operations; and, thirdly and mainly, because any bank, organized upon the principles of the present bank, would be subject to the same objections that the present bank is; would probably be owned by the same persons, and be subject to the same abuses. - I doubt whether it is in the power of statutory provisions to provide chains strong enough to confine so tremendous a power, if it shall be disposed to abuse it. The objection, therefore, to the employment of State banks, that a national institution is necessary, either as a regulator of currency or a Government agent, cannot, upon any sound principles, be maintained. The State banks, then, are to be employed, either under our law as it exists, or under the law as Congress may modify it. The bill before us proposes modifications, limiting and defining, with more precision than has heretofore been done, the executive discretion and power. It is tendered to the House, and especially to those who have raised the cry of a union in the President of the sword and the purse, when in fact he possesses neither. The present Executive does not desire, and never has
-----desired, to retain any discretionary power in the execution of the laws, which, from its nature, is susceptible of being defined by law. The Executive, and his friends upon this floor who sustain him in the recent executive measure of the removal of the deposites, desire to see him, and not only him, but his successors in the executive office, relieved from the responsibility of exercising discretionary power in relation to the safe-keeping, management, and disbursement of the public money, as far as, by legislative provisions, it can be done. The bill which has been presented contains provisions suited, in the opinion of the committee who prepared and brought it forward, to attain this end. I have invited gentlemen who may think its provisions inadequate, or who may suppose that too much power is still left in the hands of the Executive, to come forward with their modifications, still further limiting and confining his power. If they will neither accept this bill, nor propose to amend and make it more perfect, the conclusion must be, that they prefer the law as it is to any new legislative provision. If they do not co-operate with us in perfecting and passing this bill, the conclusion will be irresistible that the charge which has been made against the President, of a desire to seize upon powers which do not belong to him, was designed to produce an erroneous im: pression upon the public mind, and is wholly unfounded in fact ; that they prefer the existing laws to any amendments which can be made; and, in a word, that the real purpose to be effected by all the violent and impassioned appeals which have been made, charging him with usurpation, was to operate upon the public, with a view to procure a continuance of the present odious bank inonopoly. I shall briefly call the attention of the House to the
details of this bill. The bill provides, 1st, “, the mode of selection ;” 2d, “the securities proper to be taken o’’ and, 3d, “the manner and terms on which they are to be employed.” By the existing law, the Secretary of the Treasury possesses the power to select the banks of deposite, to prescribe the terms and conditions of their employment, and to discontinue them at pleasure. The bill continues the power of making the selections in the first instance to the Secretary of the Treasury, upon certain terms and conditions prescribed, but when once, selected, he is, by the 9th section, expressly prohibited from discontinuing any such bank as a depository, “so long as the said bank shall continue to do and perform the several duties and services required to be performed” by the bill, and “so long as said bank shall continue to be in all respects a safe depository of the public money.” It is only for failure or refusal, on the part of any bank of deposite to perform the duties and services prescribed and stipulated to be performed, or that it shall have so extended or conducted its business as to render it an unsafe depository, that the public moneys which it may hold on deposite are to be removed. And if Congress be in session, it cannot even then be discontinued without the “approbation of Congress previously obtained.” In the recess of Congress, the Secretary of the Treasury is authorized to remove the public moneys for the causes only already stated, and in that case is required to “report to Congress, at the commencement of the next session, the facts and reasons which have induced such discontinu ance.” By another provision in the bill, the power is expressly reserved to Congress at any time to pass a “law for the removal of the public money from any of the said banks.” The power reserved to Congress to remove is absolute. Congress may by law order a discontinuance of any of the selected banks as depositories, at its mere will. The Secretary, by the provisions of the bill, possesses no such power. He can only remove the public money from their keeping for the causes specified in the bill, and which have been already stated. So long, there
fore, as any bank selected as a depository shall perform the stipulations of its contract, and shall remain in a safe condition, it will hold the public money on deposite, not at the pleasure of the Executive, but independent of him. Neither the original selection, nor the continued employment of these banks by the Treasury, under such circumstances as the bill provides, can by possibility be used as a Government patronage, to control or in any degree influence them in their operations. The power of making the original selections was continued in the head of the Treasury Department—first, because the general management of the finances, and the safe-keeping and disbursement of the public money, according to law, appropriately belongs to that officer, and have always been confided to him; and, secondly, because the selections could be made by him as conveniently, and with as much safety to the public, as regards the security of public money, as by any other officer. It is true that Congress might, by law, designate the banks in which the public money shall be kept. And the committee who prepared this bill, in their report, state that “there could
be no objection to that mode, provided it be o lars. o
practicable to make the selections in such manner as t
protect and preserve the public funds to be deposited therein.” It was believed, however, that Congress, from its numbers and organization, could not so conveniently ascertain the condition and safety of the banks to be selected as the principal officer of the Government. Another suggestion has been made, and that is, that all the banks at the point or place where the revenue may be
Deposite Bank Bill.
[Juxe 20, 1834. ty for the safe-keeping of the public moneys deposited in any of the selected banks; and for the faithful performance of the duties and services which any such bank may by its contract have stipulated to perform. 3d. The bill provides the “manner and terms” on which the banks selected are to be employed. They are, 1st--To credit the Treasury for all deposites as specie. 2d. To pay all checks, warrants, or drafts, drawn on such deposites, in specie, if required by the holder thereof. 3d. To pay its notes and bills in specie, on demand. 4th. To furnish the Government the necessary facilities for transferring the public funds from place to place within the United States and the Territories thereof, and for distributing the same in the payment of the public creditors, without charging commissions or claiming allowance on account of difference of exchange. 5th. That no bank selected as a depository of the public money, shall, aster the 3d of March, 1836, issue or use any note or bill of less denomination than five dol
These several conditions and terms of employment are at once self-evident, and will require that I should add but a word or two by way of explanation. The general scope and tenor is, to make the public money, wherever deposited, equal to specie, and to secure the transmission of funds from place to place, where money may be required to be disbursed, free of expense to the Government, and by making it the interest of the deposite banks, in
received, and which may be found to be in a safe condi- consideration of the use of the deposites, when not called
tion, shall be employed in proportion to their respective capitals. The objection to this plan is, that it would too much disperse the public funds, produce unnecessary complication in the accounts of the Treasury, and some inconvenience in making disbursements, especially of large amounts, for the public service. The plan adopted by the bill continues to the Secretary of the Treasury the power of making the selections, with the restrictions over his power of discontinuance already stated. He is to select “such of the banks, incorporated by the several States, as may be located at or convenient to the points or places at which the revenues may be collected ;” and at the principal points of collection, in the principal cities, where large amounts are received, he is required to select at least two banks, provided that they be, “in his opinion, safe depositories of the public money, and shall be willing to undertake to do and perform the several duties and services, and to conform to the several conditions prescribed by the bill.” 2d. The bill next provides “the securities proper to be taken.” Before any bank shall be selected, the third section requires that the Secretary shall be furnished with a full statement of its condition and business, that he may be enabled to judge of its safety. Being first satisfied from an inspection of such a statement, and from other sources of information within his reach, that a given bank would be a safe depository, and would be willing to receive the public money on deposite, upon the terms of the bill, he is authorized to make the selection ; and by the 8th section he is authorized to enter into contracts with the selected banks. With a view to the continued safety of the public funds in any of the selected banks, he is authorized to require them, as one of the conditions upon which they are to hold the public deposites, that they shall furnish from time to time, as often as required, not exceeding once a week, such statements of their condition and business, and shall also agree to permit an inspection of the general accounts in the books of the bank, as shall relate to such statements. And as an additional security to the public, the Secretary is by the 7th section authorized, whenever in his judgment the same shall be necessary, to take additional or collateral securi
for for the public service, to induce them, after a given future day, to cease issuing small notes, and thereby gradually introduce in their stead a metallic circulation. At a still more distant day it may be proper to extend the latter condition to banks issuing notes or bills of a less denomination than tens or twenties ; but it was not deemed necessary to embrace such a provision in this bill. If it be deemed expedient, Congress may hereafter extend the law (should the bill pass) in this respect. With a view to attain the same end, the bill contains a further provision, that, after the 3d of March, 1836, the notes or bills of no bank shall be received in payment of debts due to the United States, which shall, after that date, issue any note or bill of less denomination than five dollars. In regard to the banks of deposite, it is imposed, as a condition upon which they shall be employed, that they shall, after a given future day, cease to issue or use small notes; and in regard to all specie-paying banks, the deposite banks included, it is made a condition upon which the United States will agree to receive their notes or bills in payment of public dues. The latter provision is but a modification of the joint resolution of Congress of the 30th of April, 1816, under which the notes of solvent specie-paying banks are now received in payment to the United States. That resolution prohibits the collectors of the revenue from receiving anything but the legal currency, (gold or silver coin,) the notes of the Bank of the United States, or the notes of such other banks as may redeem their notes in specie. . This resolution of 1816, by prohibiting the receipt of the notes of any bank which does not redeem its bills in specie, makes it the interest of all banks which wish to obtain general credit and circulation for their notes, by having them received in payment of the revenue, to continue the payment of specie for their notes on demand; and so this provision in this bill is designed to make it the interest of all banks, which desire to obtain for their notes a like general circulation and credit, by having them received by the United States in payment of debts, to cease to issue small notes. This provision cannot be regarded as an attempt, on the part of Congress, to regulate the paper currency of the State banks—for the constitution
al power to do this has already been denied—but as a
to which the discussions had extended, (having occupied
strong desire which I then felt to meet in argument, and partment, since the passage of the act of 1789, establish
refute, if I could, much of what was then urged o: the Treasury Department. The length
the principles and doctrines of that report.
If this was an error, why was it not shown to be such by the minority?