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H. Op R.]

The Deposite Bill.

[JUNE 24, 1834.

while I agree with these gentlemen in all these abstract tion of their fiendish purpose was prevented by this measpositions, although anxious to follow an opening so au- ure. It has snatched them from the common ruin in spicious and undeniably correct, I am unable to agree which they were about recklessly to involve the country. with them in their applications or their conclusions. Nay, But for that measure, and their anticipated victory would sir, despite my utmost exertions, I cannot fill up the gap have been the ruined fortunes of an indignant people, between the correct premises and false inferences. and their fancied immortality, infamy.

Permit me to recur to the past to explain the present. The gentlemen on the other side will unhesitatingly ac knowledge the authority from which I quote. March 2, 1811, honorable Mr. Clay, of Kentucky, made a report on a memorial asking for a recharter of the then existing United States Bank: the paragraph I shall quote is the last and the principal one:

But for the peculiar circumstances, the question of "the power to remove the deposites" never would have been raised. But it was essential for the party to have some rallying point for their clamor, and, like boys, who scream round a branch that they have thrust into a wandering swarm of bees, to alarm them into settling on it, did the leaders hope that their party would cluster about this question they had started. The right to remove the "Your committee are happy to say that they learn, deposites so clearly existed, that argument is entirely from a satisfactory source, that the apprehensions which unnecessary to establish it. Whether it should have ex- were indulged as to the distress resulting from a non-reisted is another question. But that it did exist, the gen-newal of the charter, are far from being realized in Philtlemen admit even in their denials-and the absurdity of adelphia, to which their information has been confined. this part of their tactics appears from the very mode in It was long since obvious that the vacuum in the circulawhich the attack is made. At one moment, the illegality tion of the country, which was to be produced by the of the removal of the deposites rests upon the quo animo withdrawal of the paper of the Bank of the United States, with which the President removed Mr. Duane-anon, would be filled by paper issuing from other banks. This upon his intent in appointing Mr. Taney an instant after, operation is now actually going on; the paper of the Bank because the President was (say they) advised to it by a of the United States is rapidly returning and that of other "kitchen cabinet"-then because it was announced in a banks is taking its place. The ability to enlarge their newspaper; and, 1st, because it was officially announced, accommodations is proportionately enhanced; and when and, 2d, because it was not officially announced. Like a it shall be farther increased by a removal into their vaults will-o'-the-wisp, it flits to and fro over the marsh, settling of the deposites which are in the possession of the Bank on each projecting tuft just long enough to show the de- of the United States, the injurious effects of the dissoluceitful footing beneath and the darkness around. The gen- tion of the corporation will be found to consist in an actleman [Mr. MCDUFFIE] should leave such attacks to his celerated disclosure of the actual condition of those who light troops. He may amuse his audience, but will never have been supported by the credit of others, but whose benefit himself by struggling powerfully and hopelessly insolvent or tottering situation, known to the bank, has through the mist and mire of false reasoning. been concealed from the public at large."-Bank History, p. 448.

But, sir, the power to remove the deposites is one thing, and the expediency of removing them is another. How exactly descriptive of the present position of our Its consequences are twined closely with the present affairs! How clearly it points out the course to be purquestion. Unable to charter a new bank until 1837, it sued to avoid, or at least diminish, similar evils! Supseemed impossible to escape the embarrassment and suf- pose a stranger to the present party divisions was to be fering threatened by the closing of the present bank, ex-made acquainted with the politics of 1811 and of 1834, cept by perpetuating it. Had we chosen to request the and was to be told that the person who made this report directors to accept a modified recharter, we might, during the period of suffering, have been humble petitioners at its doors, begging it to make a bargain with us, by which its own powers would be restricted. What would have been the language of the bank, with the whole treasury in its vaults, the State banks holding their existence at its will, and the pecuniary concerns of the country in its gripe? How would it have answered the congressional petitioners? Recent events show what it would have been? They would have unhesitatingly rejected the charter which limited their powers and profits, and demanded all or nothing.

still occupied a distinguished place in the arena of politics, would he not at once say that he must have been the adviser, certainly the warm and able supporter, of the measures which he had so clearly and earnestly set forth; and would not the stranger suppose him delighted to observe the good effects which these measures produced? What would be his astonishment, if told that the author of this report, with all his personal adherents, were the violent and most bitter and uncharitable opponents of the very course advised in the report; that they "gloated in ecstasy" over the misery which an opposite (their own) policy had produced, and turned away disappointed and Had we refused, its vast and unchecked power would disgusted from the return of peace and plenty so accuhave swept over the country like a tornado, and the pub-rately described in the paragraph I have read? I shall not lic treasure would have been the weapon for manacling public opinion.

Perhaps in the contest the universal necessities might have urged us to grant all the demands of the bank, and thus rivet upon us a slavery from which a revolution could alone have freed us.

enlarge on this; perhaps my remarks have already unconsciously savored of bitterness. There needs none in this instance. It is its own severest comment.

The removal of the deposites has conferred great positive advantages, as well as prevented distressing evils. A system has been established that renders the Government But the removal of the deposites, while it took from and the community independent of the United States the bank a large portion of its power to do evil, by the Bank. That it will operate as rapidly, or as convenientdisposition which was made of it, relieved the State banks ly, I do not believe; but that it operates at all, is a great from the vassalage in which they had been held, and ena-point gained, that relieves us from the danger which mebled them to supply, in a great degree, the place of the naced us, and gives us time to examine carefully and United States Bank, both as a Government agent, and as decide impartially, upon the plans proposed.

a mercantile convenience.

But for this measure, the storm would have been as destructive in its results as it has been wicked and wanton in its causes.

Before discussing these plans it is necessary to determine the standard by which they are to be measured. If we create a bank to regulate the State banks and supply us with a paper currency, be it so. Let the supporters The disappointed factions which conspired with the of it avow this as their object, and we can examine the conbank to produce it, may thank God that the consumma-stitution to ascertain whether we have the power to cre

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JUNE 24, 1834.]

ate such a bank.

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If the object be to furnish banking ac- implied in the grant of a substantive power, which is not commodations to the merchants, let this be avowed, and an essential auxiliary to the exercise of that power. we can search for the authority to create a bank for their Even if it be deemed essential, there is the further condiespecial convenience. If the object be to obtain a conve- tion that there must be nothing in its purpose or tendency nient mode of effecting exchanges, or transfers of money, at variance with the general tenor of the constitution. or of its shadowy partner, credit, from one place to As a necessary consequence, if any institution be deem another without cost, let it be avowed; and when we dis- ed essential to the exercise of any power or the performcover this power to incorporate a company to transport, ance of any duty, it should be endowed with such, and almost free of cost, the capital and produce of the mer-only such, powers and privileges as will enable it to effect chants, I shall ask for a similar provision for the transportation of the implements of labor and the produce of the farmers. In principle there is not much difference between the two, although habitual association has separated them widely.

that specific purpose; and if it appear that any of the pow ers conferred are in their tendencies inconsistent with the constitution, they should be at once withdrawn.

If improvements in political science, or any other causes, should enable the Government to exercise the No one would risk his reputation by asserting that powers and perform the duties without the aid of these either of these objects was of itself an object which, un- institutions, it would be the duty of the Government to der the constitution, would justify the incorporation. But dispense with them. If several auxiliary agents are proits supporters have artfully mingled them together, and posed as means of exercising a certain substantive power, covered the violation of the constitution by the arguments that one should be chosen which effects the purpose with of short-sighted expediency. the smallest amount of power and privilege. I should be

From the first and last objects mentioned, inferences governed by precisely the same principles in creating an have been drawn in favor of its constitutionality. The pow- office. All the power essential to perform the duty, and er to regulate the currency makes a fraction of the char- all emolument necessary to procure an officer competent ter constitutional. A strange mode of regulating! We to discharge the duty, I would freely grant, but not an charter a company that creates a currency, and, so far iota of superfluity.

from regulating it, we give the power (one of the most If we examine the several plans by these rules, we find important that the Government can exercise) to this com- the present bank clothed with powers, not merely essen pany, unconditionally, for twenty or thirty years. We tial to perform the duties of Government agent, but with have the right to regulate commerce, and on the same principle we should charter a commercial company, with important and profitable privileges, that it might first create, and, by its monopoly, indirectly regulate commerce. So far from rendering even a fraction of the charter constitutional, it leaves the whole with a power too vast to be delegated, even had we the right to dispose of it.

such as have made it the antagonist of the Government, and the arbiter of our commercial prosperity. Sir, this vast power, incautiously granted at a period of great distress, is now urged as a reason of its recharter.

So much has been said, and so much will be said, of this institution; the proofs against it are so numerous, so well known, and so decisive; and the final verdict of condemIt it said by others that a bank must be created to fur-nation so universal, that I need not weary you by discussnish, not only a uniform currency, but a moderate rate ing it. All agree in the necessity of restrictions, except of exchange, in order that the constitutional direction the ultra redemptionless friends of the bank; and if a may be observed, that "duties, imposts, and excises, bank is to be established, the only difficulty among the may be uniform throughout the United States." Those sincere supporters of the measure will be as to the na who present this argument should remember that specie ture and extent of these restrictions.

It

is the only money known to the laws, and all that laws The duties required of it by the Government are, that can do is to require that the same amount in specie shall it should receive, keep, and transmit the revenue. be every where paid. This was the only uniformity contemplated; any other would be impracticable. If food is assumed as the standard, you will find specie worth more at Cincinnati than at New York; if labor is assumed, you have a directly opposite result; and if the proposition be true, it would, of course, be the duty to modify imposts, &c. accordingly. In other words, admit the argument to be good, and it becomes our duty either to order by law that the prices of all articles shall be the same throughout the United States, or to vary the amount of duties, &c. with the incessant fluctuations of relative values.

Although, as I have already said, I am in favor of a United States Bank, it may well be supposed that I do not think any one of the objects mentioned sufficient to justify the charter under the constitution. So many appeals have been made to that corner-stone of the Government, that the word unconstitutional has almost acquired the meaning of distasteful. As I am unadorned with the logical obscurity or hair-splitting acuteness of many of its honorable expounders, I shall refer to it solely for instruc tion and guidance.

must of necessity receive deposites, and buy and sell bills of exchange. As it would not at all interfere with the duties of the bank to the Government, individuals might deposite money, receive bills of exchange, and do business with the bank on the same terms as the Government. For the safe-keeping of these deposites, and for their transportation, or for the bill of exchange, which is equivalent to it, the Government and the individuals should pay fair compensation to the bank. This is actually done by giving to the bank the use of the deposites, and by the the payment of premiums on bills of exchange. But the Government, instead of paying for these and other acts of agency, in money, pays it by the grant of additional powers and privileges, which are converted by the bank into fruitful sources of profit and influence.

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It is true that the greater portion of these powers and privileges are ordinarily granted to every bank; and so intimately have they become associated as to be deemed essential the one to the other.

A bank, in its simplest state, is merely an agent which engages to keep safely the moneys deposited, issuing to We all agree that substantive powers must be distinctly the depositor a certificate of the deposite, on the presentgranted in the constitution. But as to adjective or im- ation of which the money is restored. Even in this plied powers, they are all varieties, from the deniers of stage, a species of currency is supplied by the transfer or their existence, through every shade of coloring, to the assignment of this certificate. It is soon found that the extremes, who regard the constitution as a mere conveni- bank is the most convenient resort for the transaction of ence, to be consulted as an atheist consults his Bible, to business between those who wish to borrow and those find an excuse for the violation of the plainest command. who are able to lend. The bank becomes the common Those really desirous of observing the constitution will agent, and is soon induced, by the opportunities of loanreadily admit that no adjective power can be assumed, asing, to obtain a capital of its own, and actually loan it at Vor. X.--296

H. OF R.]

The Deposite Bill.

interest, receiving instead the notes of the borrowers. The circulation of the certificates, and the long time elapsing between their issue and their return upon the bank, suggests the idea of loaning fictitious certificates of deposite, receiving the notes of the borrowers as money. This business has no limit, save in the necessity which the bank is under to preserve the appearance of solvency, lest its certificates should depreciate. As the operations extend, certificates of deposite in banks, or with bankers at a distance, are received in payment of debts, &c. As these obligations are mutual, though not coincident, the bank becomes the agent of the exchanges, and finding it profitable, draws, and permits to be drawn, bills of exchange on its own credit, when more convenient than the purchase of bills actually held by others.

[JUNE 24, 1834.

rience might show to be necessary, could not and dare not tamper with the interests of the community.

But, sir, this bank could not go into operation for two or three years. Meanwhile, that our legislative action upon it should produce any good effect, requires the sincere and active co-operation of the present bank. But, sir, every one in and out of this House knows that "war, war to the knife," against all who will not fight under its standard, is the positive determination. It has set us and our Secretary, President and committee, at defiance; and however much we may pity and regret the madness, we cannot humor it by yielding the country to its sway. The hope which I (in common, I believe, with very many members of this House) entertained, that the friends of the bank would eventually aid us frankly and zealously The organization of the bank is now complete. The in seeking a remedy for the present, and a safeguard for only difference between that whose growth has been the future, is past. I hoped that a strong sense of public sketched, and the present bank, is that, instead of cer- duty, that sympathy for their constituents, would induce tificates of deposite, the present banks give their own them to turn from the unworthy employment of deceivnotes in exchange for the notes of borrowers. As the ing their constituents as, to the causes of their embarrassdiscounts are thus made a mere traffic of the credit of ments, to their responsible and appropriate duties as legisindividuals, for the more current credit of the bank, lators. This course on their part would have done much to there is no limit to it, except the one already mentioned. turn aside the strong current of public indignation, which These may be termed the components necessary to con- is now rising and will soon set irresistibly against those who stitute a bank. The other duties, powers, and privileges, de- created public calamity for selfish political purposes, and pend upon the laws which create them. The mere incorpo- attempted to abuse the public mind with repeated and exration gives them a high degree of credit, which may be cited statements of wrong causes. But, sir, the motives called their moral capital, that raises them at once above and the destinies of these ultra devotees of the bank will competition, and enables them to serve or to injure the com- be judged of and decided by their own constituents. Had munity in which they are located. The temptations to ex-I thought a little while ago that their devotion would be cess, addressing themselves to the covetousness and the am- so unrelenting, I should have regretted it far more than I bition of the directors, are often too powerful for their sense do now. The change which has taken place-so well of right and duty. The greater the amount of credit, in described in the quotation I have read; the improvement every department of business, the greater the profits, the in the money market; the improved and gradually imgreater the influence of the bank, and the greater the num-proving condition of business; and, more than all, the reber of persons interested in upholding it. The present turn of confidence and calmness-render their co-operabank has, unfortunately, well understood and skilfully tion less essential than I then deemed it. applied these truths. In any institution to be now created, I should jealously refrain from enabling it to follow the pernicious example. The guards must be in the charter; checks upon its operation, however plausible, must ever be ineffectual. The extension of business is always made under the luring guise of accommodating the public, and no occasional check could restrain it.

Meanwhile, the temporary expedient adopted by the Secretary of the Treasury has weathered the storm, and in doing it has given the best proof of its practical stability.

I say frankly, Mr. Speaker, that when the plan was first developed, serious objections presented themselves to my mind. My experience had been such as to render me exOf all the propositions for a bank, that will receive my ceedingly distrustful of State banks. Under good mansupport, as I have already said, which performs the du-agement, which limit their business to the wants of the ties required of it by the Government, with the smallest community, they may unquestionably be made instruments amount of power and privilege. We would not, by law, of much usefulness. But I have seen them, by adventurdirectly operate upon the persons or property of our fel-ous dealings, create a false prosperity, which crushed in low-citizens; yet, we would heedlessly create an institu- its fall the well-earned properties of the honest and industion that influences the first and controls the last. trious.

I would not consent to so great an inconsistency. I Feeling all this as an event of yesterday, I was unwil would curtail its capital and measure out every immunityling to advocate any measure which would place in their with scrupulous care. I should hesitate to grant it a char-power the pecuniary interests of the country, stimulate ter unchangeable for a certain period. I doubt the power their business beyond the proper limit, or band them toof one Congress to bind succeeding Congresses by an agreement with a creature of its own making. But, in this instance, I should be especially doubtful. The constitution gives us the right to regulate the currency, fix the value of coins, &c. By creating a United States Bank, as proposed, we throw this power into its hands, to the deprivation of succeeding Congresses. Can we do this?

gether under executive influence. Even if the first objections had been obviated, the last was fully sufficient to guide me in forming an opinion. The same reasons that would prevent me from supporting a bank with large powers, would induce me to oppose any arrangement which would bind the State banks together, and subject them to a common influence. I would not assist in cutoff the Hydra's head, that twenty might spring from the Desirous as I am for a United States Bank, I should wound. At the first glance, this seemed to me the neceswish its charter to be subject to such modifications as the sary result of the system. But the bill reported by the people, through their representatives, might from time to Committee of Ways and Means, and now under considertime think necessary. Nor would I sell this power for a ation, obviates this objection. It places the banks out of bonus. I would not yield the right to relieve the people the reach of executive control-responsible to Congressfor a paltry pittance to the Government, although I would and merely requires that they should perform the duties willingly vote for an equitable distribution among the of safely keeping and properly transmitting the public States of the surplus profits, beyond a rate fixed by moneys. All the duties that we would create a bank to law. A bank thus restricted, which the power of the perform are performed by these State banks, and they people could reach, liable to such amendments as expe-incur no responsibility, and have no more connexion with

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the Government, or with each other, than is essential to the performance of these duties.

[H. OF R.

the result could be condensed in a syllogism, or stated in an equation, the conclusion would be infallible. But moral influences, in their countless varieties, admit no such easy estimates or abridgments; and he who relies on having mastered them, will often discover that his mathemat

So far as our legislation is concerned, it is precisely as if a United States Bank had been proposed, which should merely receive the public deposites, and, by domestic bills of exchange, distribute them, as required by the Govern-ical truths are moral absurdities. ment. Was it practicable to have such a United States Bank, without the addition of any powers or immunities, every one who pretends to regard the constitution would be bound to support it. No objection could be raised to the powers, either by reference to the constitution or to the consequences of exercising them. The proposed bill is identical with this in principle, and experience has shown it to be practicable.

In examining credit, the first point presented is, the lenders and borrowers.

The thing lent is uninvested value, which the lenders think it more profitable to loan to the borrowers than to keep it in their own hands.

The inducements to the lenders are

1st. The supposed certainty or security that the loan will be repaid.

2d. The interest to be paid for its use.

I wish I could discern its operation upon our commercial interests, (mentioned in the two first objections,) as The security or certainty consists in the ability of the clearly as I perceive its constitutionality. I have thought borrower to fulfil his engagements. The case of a loan for many years that some controlling power was necessary on endorsement is no exception; the endorsement is to check excessive issues of credit by the local banks. merely a certificate of this ability, for the truth of which Our credit system, resting upon the narrow basis of our the endorser is responsible. In the extreme case, when small metallic currency, and supported alone by public the endorsement is thought to constitute the sole secuconfidence, fluctuates with every cause that affects it-rity, the loan is in effect first made to the endorser, and whether that cause be the excessive issue of fictitious by him handed over to the borrower.

1st. His property when the loan is asked.

2d. His opportunity of investing profitably his labor and capital, both owned and borrowed. These may be termed his "accidental capital." 3d. His physical ability, including health, strength, and mechanical skill.

notes, by ill-conducted banks, or the excessive issue of The actual ability of the borrower comprises the folfictitious alarms, by heated partisans in Congress. To lowing items: these evils no adequate remedy has ever been applied. The United States Bank has served indirectly as a flywheel to moderate these fluctuations, although it has been by gathering to itself the power to produce at any moment fluctuations far more disastrous. One of these we have just experienced. But under the organization which I hoped to have seen adopted, this would not probably have been intentionally repeated. Yet, however perfect may have been the organization, the evils could only have been palliated. They are inseparable from the system. Until the proportion of specie to the paper currency is greatly changed, we cannot be exempt from occasional and sometimes ruinous fluctuations.

4th. His intellectual capacity, including industry, judgment, talents, education, and professional skill.

5th. His moral character, the indispensable requisite which ensures the preservation of his capital from waste by expensive habits, and guaranties the punctual and honest fulfilment of his engagements.

The three last may be termed his personal worth, or

Our credit system is a great good converted by excess" personal capital," although the fifth item deserves a into an alarming evil.

Mr. Speaker, I will take the present moment to notice the amendment presented by the honorable gentleman from Illinois, [Mr. DUNCAN,] which is, in fact, a recharter of the present United States Bank; in which there is much to approve, and more to condemn. To its adoption I have insuperable objections.

First. Should Congress present such a recharter to that audacious institution, it would be spurned from the bank as impudent on the part of the Government.

Second. I would never serve or court that institution while she stands in contempt of the House, the people, the nation; setting the laws and the constitution at defiance. Let her open her doors, her books, her vaults, to the inspection of our committee; then, and not till then, will it become the representatives of the people to accept or offer terms to the bank.

separate place, by the name of "moral capital." It may be possessed by all, and the young farmer and mechanic may rely on it with perfect certainty for the attainment, with proper exertions, of fortune and reputation. It is the basis of confidence between individuals, and the aggregate of these individual "moral capitals" is the "moral capital" of the community-the basis of public confidence.

These components are combined in very different proportions in different individuals. One of them, (1st,) property, may be entirely wanting, but all the others must be possessed in a greater or less degree, and their sum is the ability of the borrower or the actual security to the lender. A deficiency in any one of these components diminishes this security, which is one of the inducements to the lender, and renders it necessary to increase the other inducement, the interest to be paid for its use.

The better the lender knows the borrower the nearer will the supposed security approach the actual security, and the interest asked, to the interest which should be paid.

To the amendment offered by the honorable gentleman from Virginia, [Mr. GORDON,] and the proposition of the honorable and eloquent gentleman from Pennsylvania, Assuming the aggregate of personal capitals such as [Mr. COULTER,] I have an objection equally conclusive to to render loans liable to no extraordinary risk, the inmy mind. They propose that the treasury of the nation vestment of capital in loans will be regulated by the same shall be kept by the Treasurer and his agents, until laws that govern ordinary investments. disbursed. This proposition adopted, and millions of The lenders will not loan their capital at less profit than the money of the people, from the time of collection they can obtain at the same risk and with the same trouto the period of disbursement, would be drawn from cir-ble by investing it in any other way; allowing for the greatculation, and rest as useless as if out of existence. This er or less facility with which the investment may be discould but produce fluctuations, and periodical ruin and engaged and converted into money.

distress. The average profit upon capital fixes, therefore, the In reading an ingenious pamphlet, by a gentleman of lowest rate of interest that the lenders will receive, and Philadelphia, aiming to prove that paper notes were bet- they will obtain as much more as they can get. ter than metallic coin, I could not help noticing the inapplicability of the reasoning used in the exact sciences to political subjects. If all the causes which operate upon

The interest actually paid depends upon the relation between the supply of capital for loans to the demand for them. When these are equivalent, the average in

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terest actually paid will coincide with the lowest rate of
interest just mentioned. The lowest class of borrowers
will be those whose profits, derived from their accidental,
their personal, and their borrowed capital, are barely
sufficient to pay the interest and to subsist themselves.
If, as is usual, the supply is less than the demand, the
lenders can exact a higher interest.

The lowest class just named cannot pay the increased rate, and, of necessity, thus cease to be borrowers.

[JUNE 24, 1834.

It is evident that the agent for performing these offices must be in itself uniform, permanent, and sufficiently plentiful and widely diffused, to reach every kind of property. If such a currency exist, and co-existent a credit system, resting on a well-ascertained basis of "accidental," and, especially, "personal" capital, public confidence cannot be destroyed, unless some great national calamity an nihilates existing capital. Even if, in a particular district, such causeless distrust should exist, the metallic curThe next higher class in the scale of profits take their rency, unaffected itself, would furnish the means of checkplace with profits diminished in like manner to a bare sub-ing it at once, perhaps, in some instances, at slight sacsistence. The additional rate of interest occasions other rifices by individual debtors. The credit system, in itself less profitable investments to be disengaged into capital is, as I have already said, a great good, when resting for loans. This increased supply diminishes somewhat upon the basis of accidental and particularly personal capithe rate of interest, enlarges the lowest class of borrow- tal, and supported by a uniform and permanent currency. ers, and brings about an equilibrium between the profits In this country we have every element that I have menof these and other investments, raising somewhat the tioned, in a high degree; personal capitals in a higher general average. Similar changes are caused by every degree than in any other country; and we are only defi increase of the disproportion. cient in a permanent and uniform currency.

The same remarks apply to every individual case. Circumstances of position or necessity may limit the supply available to the borrower, and the lender may therefore exact the highest rate, leaving to the borrower only as much of the profits as will subsist him.

Our banks have coined credit into transferable capital. An adventurous and beardless nephew of a bank director, with no "personal capital," obtains a loan of "bank credit," in the shape of notes "of promise to pay," and gives them his own note instead.

These may vary from the general average of interest The farmer who sells his corn and pork to this youngas well as those which are made under the spur of some ster, and receives these "bank credits" in exchange, especial necessity, in which the usurious rate is only limit- little thinks that the eventual means for redeeming these ed by the satiated covetousness of the lender, or the ex-notes are really the note of the young man placed in the treme ability of the borrower.

This analysis exhibits the true sources of credit which enables one man to borrow the value which may be held by another.

In every country containing intelligent, industrious, and honest citizens, these sources of credit exist. That they should be available, there must be two other requisites: First, that the country should afford opportunities for the profitable employment of the capital borrowed; and, second, that there should be capital to loan.

This capital consists of value accumulated in the country by labor, or accumulated by labor elsewhere and brought thither.

This value should be easily transferable, and universally receivable. It should also retain permanently the worth assigned to it when loaned, that the borrower might, if possible, return to the lender the identical value loaned. The metallic coins fulfil all these conditions, and they constitute the transferable capital actually accumulated by labor.

bank-a note for which the farmer would not give him an armful of husks. But all this would be corrected by clear-sighted self-interest, if the means of doing it were supplied. It is not so much the excess of credits as it is the want of the metallic basis, which would limit while it supported it.

It is worse than nonsense to talk of diminishing credits. They will always, in an enterprising country like this, be kept to the highest point to which the borrowers can carry them. Create a bank in every village, and you will find persons eager to borrow every cent, and with personal capital as security. But these banks, limited in the real value at their disposal, are unlimited in the fictitious values, the bank notes-their own credits, far beyond the proper ratio to their means, these they can issue to any extent that a gambling calculation of chances may permit. Here is the evil, and its consequences are obvious and disastrous.

The first effect is to drive away their rival, metallic currency, and evidences of credit receivable elsewhere. These Any fluctuation in the value of this transferable capi- are taken away, because they will pass abroad. The bank tal will occasion embarrassment and loss, as the borrow-notes will pass only at home, and therefore they will stay ers will, in the one case, have to repay more, and the lenders, in the other case, to receive less, than in right bound to do.

A country possessing a metallic courrency will not be liable to any extrinsic fluctuations, except such as may arise from material changes in the relative prices of the mass of its staple products, compared with those of the countries with which it is connected by commerce; and these fluctuations will be slower and slighter as the metallic currency is greater in amount, the staple products more numerous, various, and valuable, and foreign and domestic commerce more rapid and extensive.

The sum of the accidental and personal capitals of individuals to the national capital, and the transferable capital or currency, coming in contact with every species of property, diffuses among the whole an impulse upon any part, and diminishing it as it spreads it into an average effect upon all. This currency, or transferable capital, should perform two important offices:

1st. Serving as the means of estimating and exchanging all other values.

24. As the medium for correcting and preventing the fluctuations arising from sudden changes of relative value.

at home. A paper currency is immediately created, as unstable as the varying opinions of men. A bank which will throw into circulation a large quantity of these bills, and, from the public confidence in its notes, or other causes, can maintain them in circulation, has the control of the currency, and necessarily, in a degree, of the commerce of the country.

This the United States Bank has done, and has made most wicked use of the power. It is what the State banks did from a fancied necessity, during the war, and from eagerness of gain at a later period. But the remedy is not to diminish the number of banks; those remaining will issue more, to supply the vacuum left by their notes.

Let the banks be as numerous as the leaves on the trees, if they are called for; they are useful agents-especially our State banks-between the capitalists and the honest and industrious men whose only wealth is their "personal capital." No, the remedy must reach the currency itself, and not the credits founded on it.

Make the currency good, and the credits will be good. As I have said already, the only permanent benefit is to be obtained by increasing the quantity of coin in proportion to the quantity of paper. I will not now weary you

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