legal currency of the country and in his people, instead of being kept till it is

own possession pursues without loss the current of his business. The government, placed in the situation of the former, is involved in embarrassments it would not have suffered had it pursued the course of the latter. These embarrassments are, moreover, augmented by those salutary and just laws which forbid it to use a depreciated currency, and by so doing take from the government the ability which individuals have of accommodating their transactions to such a catastrophe.

needed for their use, is, in consequence of this authority, a fund on which discounts are made for the profit of those who happen to be owners of stock in the banks selected as depositories. The supposed and often exaggerated advantages of such a boom will always cause it to be sought for with avidity. I will not stop to consider on whom the patronage incident to it is to be conferred. Whether the selec tion and control be intrusted to Congress or to the executive, either will be subjected to appeals made in every form which the sagacity of interest can suggest. The banks under such a system are stimulated to make the most of their fortunate acquisition; the deposits are treated as an increase of capital; loans and circulation are rashly augmented, and when the publie exigencies require a return it is attended with embarrassments not provided for nor foreseen. Thus banks that thought themselves most fortunate when the public funds were received find themselves most embarrassed when the season of payment suddenly arrives.

A system which can in a time of profound peace, when there is a large revenue laid by, thus suddenly prevent the application and the use of the money of the people in the manner and for the objects they have directed cannot be wise; but who can think without painful reflection that under it the same unforeseen events might have befallen us in the midst of a war and taken from us at the moment when most wanted the use of those very means which were treasured up to promote the national welfare and guard our national rights? To such embarrassments and to such dangers will this government Unfortunately, too, the evils of the sysbe always exposed while it takes the tem are not limited to the banks. It moneys raised for and necessary to the stimulates a general rashness of enterpublic service out of the hands of its own prise and aggravates the fluctuations of officers and converts them into a mere right of action against corporations intrusted with the possession of them. Nor can such results be effectually guarded against in such a system without investing the executive with a control over the banks themselves, whether State or national, that might with reason be objected to. Ours is probably the only government in the world that is liable in the management of its fiscal concerns to occurrences like these.

But this imminent risk is not the only danger attendant on the surrender of the public money to the custody and control of local corporations. Though the object is aid to the treasury, its effect may be to introduce into the operations of the government influences the most subtle, founded on interests the most selfish.

commerce and the currency. This result was strikingly exhibited during the oper ations of the late deposit system, and especially in the purchases of public lands. The order which ultimately directed the payment of gold and silver in such purchases greatly checked, but could not altogether prevent, the evil. Specie was indeed more difficult to be procured than the notes which the banks could themselves create at pleasure; but still, being obtained from them as a loan and returned as a deposit, which they were again at liberty to use, it only passed round the circle with diminished speed. This oper ation could not have been performed had the funds of the government gone into the treasury to be regularly disbursed, and not into banks to be loaned out for their own profit while they were permitted to substitute for it a credit in account.

The use by the banks, for their own benefit, of the money deposited with them has received the sanction of the govern- In expressing these sentiments I desire ment from the commencement of this con- not to undervalue the benefits of a salunection. The money received from the tary credit to any branch of enterprise.

dence

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for

it is The credit bestowed on probity and indus- possession against accident, violence, or try is the just reward of merit and an fraud. The assertion that they are SO honorable incentive to further acquisi- must assume that a vault in a bank is tion. None oppose it who love their coun- stronger than a vault in the treasury, and try and understand its welfare. But when that directors, cashiers, and clerks not it is unduly encouraged; when it is made selected by the government nor under its to inflame the public mind with the temp control are more worthy of confidence than tations of sudden and unsubstantial officers selected from the people and rewealth; when it turns industry into paths sponsible to the government officers that lead sooner or later to disappoint- bound by official oaths and bonds for a ment and distress, it becomes liable to faithful performance of their duties, and censure and needs correction. Far from constantly subject to the supervision of helping probity and industry, the ruin to Congress. which it leads falls most severely on the great laboring classes, who are thrown suddenly out of employment, and by the failure of magnificent schemes never intended to enrich them are deprived in a moment of their only resource. Abuses of credit and excesses in speculation will happen in despite of the most salutary laws; no government, perhaps, can altogether prevent them, but surely every government can refrain from contributing the stimulus that calls them into life. Since. therefore, experience has shown that to lend the public money to the local banks is hazardous to the operations of the government, at least of doubtful benefit to the institutions themselves, and productive of disastrous derangement in the business and currency of the country, is it the part of wisdom again to renew the connection?

M

The difficulties of transfer and the aid heretofore rendered by banks have been less than is usually supposed. The actual accounts show that by far the larger portion of payments is made within short or convenient distances from the places of collection; and the whole number of warrants issued at the treasury in the year 1834-a year the result of which will, it is believed, afford a safe test for the future-fell short of 5,000, or an average of less than one daily for each State; in the city of New York they did not average more than two a day, and at the city of Washington only four.

The difficulties heretofore existing are. moreover, daily lessened by an increase in the cheapness and facility of communication, and it may be asserted with confidence that the necessary transfer, as well as the safe-keeping and disbursements of the public moneys, can be with safety and convenience accomplished through the agencies of treasury officers. This opinion has been in some degree confirmed by actual experience since the discontinuance of the banks as fiscal agents in May last -a period which from the embarrassments in commercial intercourse presented obstacles as great as any that may be hereafter apprehended.

It is true that such an agency is in many respects convenient to the treasury, but it is not indispensable. A limitation of the expenses of the government to its actual wants, and of the revenue to those expenses, with convenient means for its prompt application to the purposes for which it was raised, are the objects which we should seek to accomplish. The collection, safe-keeping, transfer, and dis bursement of the public money can, it is believed, be well managed by officers of the government. Its collection, and to a great extent its disbursement also, have indeed been hitherto conducted solely by them, neither national nor State banks, when employed, being required to do more than keep it safely while in their custody, and transfer and pay it in such portions and at such times as the treasury shall direct. Surely banks are not more able than the government to secure the money in their

The manner of keeping the public money since that period is fully stated in the report of the Secretary of the Treasury. That officer also suggests the propriety of assigning by law certain additional duties to existing establishments and officers which, with the modifications and safeguards referred to by him, will, he thinks. enable the department to continue to perform this branch of the public service without any material addition either to their number or to the present expense.

The extent of the business to be trans- has hitherto existed between the government and banks offer sufficient advantages to justify the necessary expenses. If the object to be accomplished is deemed important to the future welfare of the country, I cannot allow myself to believe that the addition to the public expenditure of comparatively so small an amount as will be necessary to effect it will be objected to by the people.

laws being, in the opinion of that officer, ample for those objects.

acted has already been stated; and in respect to the amount of money with which the officers employed would be intrusted at any one time, it appears that, assuming a balance of $5,000,000 to be at all times kept in the treasury, and the whole of it left in the hands of the collectors and receivers, the proportion of each would not exceed an average of $30,000; but that, deducting $1,000,000 for the It will be seen by the report of the use of the mint and assuming the remain- Postmaster-General herewith communiing $4,000,000 to be in the hands of cated that the fiscal affairs of that departone-half of the present number of officers ment have been successfully conducted -a supposition deemed more likely to cor- since May last upon the principle of dealrespond with the fact-the sum in the ing only in the legal currency of the Unithands of each would still be less than ed States, and that it needs no legislation the amount of most of the bonds now to maintain its credit and facilitate the taken from the, receivers of public money. management of its concerns, the existing Every apprehension, however, on the subject, either in respect to the safety of the money or the faithful discharge of these fiscal transactions, may, it appears to me, be effectually removed by adding to the present means of the treasury the establishment by law at a few important points of offices for the deposit and disbursement of such portions of the public The power and influence supposed to be revenue as cannot with obvious safety connected with the custody and disburseand convenience be left in the possession ment of the public money are topics on of the collecting officers until paid over by which the public mind is naturally, and them to the public creditors. Neither with great propriety, peculiarly sensitive. the amounts retained in their hands nor Much has been said on them in reference those deposited in the offices would in an to the proposed separation of the governordinary condition of the revenue be larger ment from the banking institutions; and in most cases than those often under the surely no one can object to any appeals control of disbursing officers of the army or animadversions on the subject which and navy, and might be made entirely safe are consistent with facts and evince a by requiring such securities and exercis- proper respect for the intelligence of the ing such controlling supervision as Con- people. If a chief magistrate may be algress may by law prescribe. The prin- lowed to speak for himself on such a point, cipal officers whose appointments would I can truly say that to me nothing would become necessary under this plan, taking the largest number suggested by the Secretary of the Treasury, would not exceed ten, nor the additional expenses, at the same estimate, $60,000 a year.

Difficulties will doubtless be encountered for a season and increased services required from the public functionaries; such are usually incident to the commencement of every system, but they will be greatly lessened in the progress of its operations.

be more acceptable than the withdrawal from the executive, to the greatest prac ticable extent, of all concerns in the custody and disbursement of the public revenue; not that I would shrink from any There can be no doubt of the obligations responsibility cast upon me by the duties of those who are intrusted with the affairs of my office, but because it is my firm beof government to conduct them with as lief that its capacity for usefulness is in little cost to the nation as is consistent no degree promoted by the possession of with the public interest; and it is for any patronage not actually necessary to Congress, and ultimately for the people, the performance of those duties. But unto decide whether the benefits to be de- der our present form of government the inrived from keeping our fiscal concerns tervention of the executive officers in the apart and severing the connection which custody and disbursement of the public

money seems to be unavoidable; and be fore it can be admitted that the influence and power of the executive would be increased by dispensing with the agency of banks the nature of that intervention in such an agency must be carefully regarded, and a comparison must be instituted between its extent in the two cases. The revenue can only be collected by officers appointed by the President with the advice and consent of the Senate. The public moneys in the first instance must therefore in all cases pass through hands selected by the executive. Other officers appointed in the same way, or, as in some cases, by the President alone, must also be intrusted with them when drawn for the purpose of disbursement. It is thus seen that even when banks are employed the public funds must twice pass through the hands of executive officers. Besides this, the head of the Treasury Department, who also holds office at the pleasure of the President, and some other officers of the same department, must necessarily be invested with more or less power in the selection, continuance, and supervision of the banks that may be employed. The question is then narrowed to the single point whether in the intermediate stage between the collection and disbursement of the public money the agency of banks is necessary to avoid a dangerous extension of the patronage and influence of the executive. But is it clear that the connection of the executive with powerful moneyed institutions, capable of ministering to the interests of men in points where they are most accessible to corruption, is less liable to abuse than his constitutional agency in the appointment and control of the few public officers required by the proposed plan? Will the public money when in their hands be necessarily exposed to any improper interference on the part of the executive? May it not be hoped that a prudent fear of public jealousy and disapprobation in a matter so peculiarly exposed to them will deter him from any such interference, even if higher motives be found inoperative? May not Congress so regulate by law the duty of those officers and subject it to such supervision and publicity as to prevent the possibility of any serious abuse on the part of the executive? And is

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there equal room for such supervision and publicity in a connection with banks, acting under the shield of corporate immunities and conducted by persons irresponsible to the government and the people? It is believed that a considerate and candid investigation of these questions will result in the conviction that the proposed plan is far less liable to objection on the score of executive patronage and control than any bank agency that has been or can be devised.

With these views I leave to Congress the measures necessary to regulate in the present emergency the safe-keeping and transfer of the public moneys. In the performance of constitutional duty I have stated to them without reserve the result of my own reflections. The subject is of great importance, and one on which we can scarcely expect to be as united in sentiment as we are in interest. It deserves a full and free discussion, and cannot fail to be benefited by a dispassionate comparison of opinions. Well aware myself of the duty of reciprocal concession among the co-ordinate branches of the government, I can promise a reasonable spirit of co-operation, so far as it can be indulged in without the surrender of constitutional objections which I believe to be well founded. Any system that may be adopted should be subjected to the fullest legal provision, so as to leave nothing to the executive but what is necessary to the discharge of the duties imposed on him; and whatever plan may be ultimately established, my own part shall be so discharged as to give to it a fair trial and the best prospect of success.

The character of the funds to be received and disbursed in the transactions of the government likewise demands your most careful consideration.

There can be no doubt that those who framed and adopted the Constitution, having in immediate view the depreciated paper of the Confederacy-of which $500 in paper were at times only equal to $1 in coin-intended to prevent the recurrence of similar evils, so far at least as related to the transactions of the new government. They gave to Congress express powers to coin money and to regulate the value thereof and of foreign coin; they refused to give it power to establish cor

porations-the agents then as now chiefly paper had become so apparent that even

employed to create a paper currency; they prohibited the States from making anything but gold and silver a legal tender in payment of debts; and the first Congress directed by positive law that the revenue should be received in nothing but gold and silver.

Public exigency at the outset of the government, without direct legislative authority, led to the use of banks as fiscal aids to the treasury. It admitted deviation from the law; at the same period and under the same exigency, the Secretary of the Treasury received their notes in payment of duties. The sole ground on which the practice thus commenced was then or has since been justified is the certain, immediate, and convenient exchange of such notes for specie. The government did, indeed, receive the inconvertible notes of State banks during the difficulties of war, and the community submitted without a murmur to the unequal taxation and multiplied evils of which such a course was productive. With the war this indulgence ceased, and the banks were obliged again to redeem their notes in gold and silver. The treasury, in accordance with previous practice, continued to dispense with the currency required by the act of 1789, and took the notes of banks in full confidence of their being paid in specie on demand; and Congress, to guard against the slightest violation of this principle, have declared by law that if notes are paid in the transactions of the government it must be under such circumstances as to enable the holder to convert them into specie without depreciation or delay.

Of my own duties under the existing laws, when the banks suspended specie payments, I could not doubt. Directions were immediately given to prevent the reception into the treasury of anything but gold and silver, or its equivalent, and every practicable arrangement was made to preserve the public faith by similar or equivalent payments to the public creditors. The revenue from lands had been for some time substantially so collected under the order issued by directions of my predecessor. The effects of that order had been so salutary and its forecast in regard to the increasing insecurity of bank

before the catastrophe I had resolved not to interfere with its operation. Congress is now to decide whether the revenue shall continue to be so collected or not.

The receipt into the treasury of banknotes not redeemed in specie on demand will not, I presume, be sanctioned. It would destroy without the excuse of war or public distress that equality of impost and identity of commercial regulations which lie at the foundation of our confederacy, and would offer to each State a direct temptation to increase its foreign trade by depreciating the currency received for duties in its ports. Such a proceeding would also in a great degree frustrate the policy so highly cherished of infusing into our circulation a larger proportion of the precious metals-a policy the wisdom of which none can doubt, though there may be different opinions as to the extent to which it should be carried. Its results have been already too auspicious and its success is too closely interwoven with the future prosperity of the country to permit us for a moment to contemplate its abandonment. We have seen under its influence our specie augmented beyond $80,000,000, Our coinage increased so as to make that of gold amount between August, 1834, and December, 1836, to $10,000,000, exceeding the whole coinage at the mint during the thirty-one previous years.

The prospect of further improvement continued without abatement until the moment of the suspension of specie payments. This policy has now, indeed, been suddenly checked, but is still far from being overthrown. Amid all conflicting theories, one position is undeniable-the precious metals will invariably disappear when there ceases to be a necessity for their use as a circulating medium. It was in strict accordance with this truth that, while in the month of May last they were everywhere seen and were current for all ordinary purposes, they disappeared from circulation the moment the payment of specie was refused by the banks and the community tacitly agreed to dispense with its employment. Their place was supplied by a currency exclusively of paper, and in many cases of the worst description. Already are the bank-notes now in circula