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JUNE 20, 1834.] Deposite
Bank Bill. [H. of R.
the exercise of whatever power was conferred on him by Congress, and the avowal of his determination to exercise this right, and then to point out the sanction we are now called on to give to this claim of power. In the very first section of the bill under consideration, the Committee of Ways and Means propose to provide “that it shall be the duty of the Secretary of the Treasury to select and employ, as the depositories of the money of the United States, such of the banks incorporated by the several States,” &c. Here, then, with fair notice of the right asserted by the President, the committee propose so to regulate the deposite of the public moneys as to place them entirely within his custody and control. It was indeed somewhat remarkable, that, with this claim of power staring them in the face, and with the professions so repeatedly made, that the great object was to guard the public treasury, and place it beyond executive interfer. ence, the committee should have thought proper to apply to the Executive to prescribe these safeguards, and suggest the regulations necessary to be made. Yes, sir, said Mr. F., the committee state in their report that “they deemed it proper, in a matter of so much importance, to ascertain from the Secretary of the Treasury his opinion and views in regard to the regulations proper to be adopted in the employment of the State banks as the depositories of the public money ’’ and they report to the House the Secretary’s letter, upon the suggestions of which this bill is framed; and as, by the new executive creed, the Secretary is entirely under the control of the President, this letter has doubtless received his approbation: so that we are now furnished with an executive project for regulating the custody of the public money, which is to be matured by Congress; and, as might have been expected, the Executive, in perfect consistency, contemplates by this project such regulations as will leave the depositories to its selection and employment, and thus secure the custody which it claims. Mr. F. said there was a striking coincidence which he begged leave here to notice. He was not able to refer to dates, not having the papers before him, (he regretted he had noti) but his impression was, that no great length of time intervened between the call upon the Secretary of the Treasury by the committee, his reply, and the protest.” Thus, while the administration was asserting its claims to the custody of the public money to one branch of Congress, it was submitting to the other its scheme for carrying them into effect. And here, Mr. F. said, the reasons against the act of the President, in removing the deposites, were most strikingly illustrated. By this very act the President had acquir. ed a control over the public money, which could not be divested unless Congress should pass just such a law on the subject as was agreeable to him. He suggests, to be sure, (or the Secretary of the Treasury does,) that provision be made for depositing the public money in the State banks, under regulations to be prescribed by Congress; but the very bill submitted to us, providing these regulations, concedes to the President the very power which he claims. And does any gentleman believe that any act which does not virtually contain this concession can be passed, except by the vote of two-thirds of both Houses of Congress? For instance, if the power and duties assigned by this bill to the Secretary of the Treasury were conferred on, and confided to, the Commissioners of the Sinking Fund, does any one imagine that the act, if passed by Congress, would receive the sanction
"On examination, it appears that the letter of the chairman of the Committee of Ways and Means to the Secretary of the Treasury, asking “his views and opinions,” was dated on 7th April. The Secretary's reply bears date 15th April, and the protest of the President was sent to the Senate on the 17th of the *atue inanth.
of the President? No, sir; having declared that “the custody of the public money cannot be taken from the Executive without violating the first principles of the constitution,” he certainly would put his veto on any act proposing to confide this custody to other hands. But, although Mr. F. was opposed to the power proposed to be yielded by the bill before the House, he desired to have it amended, so that, if it passed, there should be nothing left to misconstruction. The bill proposes (as already remarked) to authorize the Secretary of the Treasury to select and employ the banks of deposite. Now, as we were forewarned that the President will claim and exercise whatever power is conferred on the Secretary, Mr. F. should move, at a proper time, to amend the bill by striking out the words “the Secretary of the Treasury,” in the first line of the first section of the bill, and inserting, in lieu thereof, “the President of the United States;” so that the authority intended to be conferred should at once be conferred on the functionary by whom it is claimed, and under whose direction and control, even if the bill passed in its present shape, it would be exercised. Mr. F. had nothing to conceal; he had always found a straight-forward course the safest, and certainly the most honorable. He wished to see if Congress was disposed to yield to the Executive the power it had claimed; and, if so disposed, he hoped it would be expressed in plain, intelligible language; he wanted nothing uncertain, nothing equivocal. Let not gentlemen seek to obtain, by indirection, that which they will not openly advocate. If they intend to yield this power to the President, as they certainly will by the passage of this bill, let them say so, that the people may understand it; though against such a concession of power, as well as against the claim set up to it, Mr. F. took occasion, before this House and this country, in language now consecrated by authority, to enter his “solemn protest.” And Mr. F. implored gentlemen, before they went too far, to reflect seriously on the concession they were about to make. Much had been said during the session about executive usurpation—the union of the purse and the sword, &c. With these matters he should not now concern himself; he wished to draw the attention of the House to the important principles which they were called upon to decide; and he was anxious that they should be decided without reference to any particular individual. We were not legislating merely for the present moment, but for all time. He especially begged the devoted friends of the present Chief Magistrate to remember that they were now settling principles which would last long after he had retired from his present elevated station; and, unlimited as their confidence may be in him, were they prepared to yield the same powers to his successor? Do they see no danger in the exercise of the power in question by a daring and ambitious man? Remember, said Mr. F., how many restless and aspiring spirits we have among us, eager for the pinnacle of power; and shall we risk the fate of our glorious constitution, and the destinies of this great confederacy, by sanctioning now a claim of power merely from respect for and confidence in the man who is to exercise it for a few brief years? Mr. F. again entreated gentlemen to pause and reflect; look only half a century ahead; forget the controversy between the Executive and the United States Bank, and think only of the great issue involved in it. Was this House prepared to ingraft upon the constitution, which all profess to venerate so highly—no, sir, not to ingraft upon the constitution—thanks to the wisdom of our fathers, that is more than we have the power to do; but were gentlemen prepared to acquiesce silently in the establishment of a principle, the effect of which would be to blot out the well-defined lines which separate the different departments of the Government, and to unsettle the checks and balances of the constitution? For himself,
Mr. F. declared he never would contribute, by his vote,
It would be remarked, Mr. F. said, that these were not among the conditions which the Secretary was required to make with the banks; but positive requisitions, proposed to be made a law of this Government, on the banks which should be employed. The bank selected “shall furnish to the Secretary of the Treasury statements setting fortlı its condition and business,” &c. Here is nothing like an agreement; it is imperative. It is the language of command. It is the language of law. True, there was no penalty attached to a failure or refusal to comply with such requisition; but, once admit the right of Congress to make the requoition, and the right to prescribe a punishment for the violation follows as a necessary consequence. And where, demanded Mr. F., did Congress derive the right to make these requisitions of corporate bodies, existing under the authority of the States? He denied that any such right existed; and it was the impe. rious and especial duty of those who were for preserving and protecting the rights of the States to resist, at the threshold, such assumption of power. There were some other provisions of this bill which Mr. F. could not pass over without at least a slight no. tice. By the ninth section it was provided, among other things, that, in the recess of Congress, the Secretary of the Treasury may, under certain circumstances, withdraw the public money from the banks in which it shall be de. posited; in which event it shall be his duty to “report to Congress, at the commencement of its next session, the facts and reasons which have induced such discontinuance.” This power of withdrawal was, under the new theory, to be exercised entirely under executive discretion and direction; and Mr. F. hoped that the same amendment which he had suggested to a previous part of the bill, that of inserting the President instead of the Secretary of the Treasury, would also be made here. For, if the bill should pass in its present shape, and the President should order a withdrawal of the deposites from any of the banks, for reasons which he might not feel willing to have too closely examined, and should, therefore, forbid the Secretary of the Treasury from communica.
Doposite Bank bill.
ting the reasons to Congress, how could this requisition
Mr. W., at the time referred to, had expressed plainly
what he felt strongly, but having said what he thought, was too fond of his own repose to harbor ill-will to any one. If the gentleman had satisfied his conscience on the occasion in question, by the belief that he was merely performing an honest act of public duty, Mr. W. would be the last to disturb its tranquillity. The House had voted— That the Bank of the United States ought not to be rechartered: That the deposites ought not to be restore 1: That the deposites in the State banks ought to be regulated by law. This bill, then, is the regulation proposed; the sanction of the Secretary’s act; the adoption of the executive policy; the legislative recognition and approval of the President’s experiment. This, we have heard from high authority, is the only measure of relief the country need expect. As to the people, indeed, we are assured their distresses are imaginary. They only require to be relieved of the panic-makers. The approaching adjournment will do that. “The Government,” feeling no distress, (except in the Post Office,) can get on without this bill, having the custody of the treasury already. This assurance is consolatory. But why, then, must we be goaded to its adoption? The spirit of party, he hoped, might be satisfied with the implied, equivocal, negative sanction we have given to the past, by only not condemning it. Shali we be urged—would it be prudent to urge us farther? If we pass this bill, we make all that has been done our own. There are reasons for acting on it definitely, however. All sides of the House feel that. The country is tired of evasions. The friends of the administration are, in some degree, pledged to pass it through this body. They will do it the more readily, because it is sure to fail in the other. They desire the Senate shall reject it, so as to incur the odium of defeating a measure which is to put an end to corruption, and give us a better currency than the United States Bank. Every true believer expects the fulfilment of the prophecy with impatience. If the Senate will not pass it, the prediction cannot be falsified. Besides, the state of parties may change. Responsibility assumed, may be enforced. The custody of the treasury, with our friends in power, is safe and easy. Rendering an account of its seizure and deficit, to our adversaries may be less pleasant. On the other hand, the opposition may desire to see the administration commit themselves and their friends to this measure. They may hope, if it passes, that the Senate will amend it, and send us something better. Perhaps they deem the worst measure which the Government can adopt better than perpetual inactivity and subterfuge. Before it passed, however, he wished to point out a few errors and defects in its provisions, some of which its friends, if they regarded their own principles and pledges, were bound to remedy, He did not propose to treat the subject in detail, but to examine its main features. What the members of the House desired, at this stage of the session, was not an argument in form, most logically prolix, but facts and hints, the materials for thought, out of which each man for himself would work out his own conclusion. In the first place, he thought the selection of banks, to be employed as depositories, might be made, and ought to be made, by Congress. He did not perceive any insuperable difficulty, and nothing less should prewent it. The committee themselves admitted there could be no objection to that mode, provided it be deemed practicable to make the selections in such a manner as to protect and preserve the public funds. And why not practicable? Have we not the same sources of information as the Secretary Where are the returns of the State banks’ Cannot we invite further information; raise"a committee; or take any other measure that may be re
quisite? Which do we distrust, our integrity or our discretion? Why must we delegate this important power and duty to the Secretary? Are we invited to stustify or to stigmatize ourselves? For his own part, said Mr. W., if there must be a selection, he would not surrender the right of Congress to make it. He feared giving it up might be construed into an admission of the President’s claim to the custody of the public money. He did not mean, by any act of his, to lend the least sanction to the doctrines of the protest, text or gloss. He did not intend to discuss those doctrines. Time would be wanting. On that topic, if the gentleman from Tennessee was not satisfied with the arguments of the distinguished Senator from Massachusetts, [Mr. WEhstER, ) he must leave him to discuss the matter with his own friend, the gentleman from Virginia, [Mr. Wise.] Mr. Wilne next objected to the bill, that it required no compensation from the State banks for the use of the public money. The Bank of the United States paid the nation for the privileges it enjoyed. The bonus distributed over the period of its charter was equivalent to eighty or ninety thousand dollars annually, and now it is proposed to give gratuitously to the State banks what the United States Bank had only by paying for it. Mr. Gallatin's report of 1809 suggests the payment of interest on the public deposites, whenever they exceed a certain sum—three millions, he believed. An honorable Senator from Missouri, [Mr. BENTox,] some time since, proposed to subject the Bank of the United States to the payment of interest on the public moneys, in addition to the bonus it had already paid. The average of those deposites, if he remembered rightly, for he did not speak by the book, exceeded six millions and a half of dollars; and the interest on the surplus, at the moderate rate of two per cent., would amount to seventy thousand dollars. Here, then, is a benefit, equivalent at least to that sum, gratuitously conferred on the State banks, for which the Bank of the United States paid upwards of eighty thousand dollars. Mr. W. asked the gentlemen who were so fearful of corruption, if there was no danger of favoritism and corruption here? Are the State banks less moneyed aristocracies than the Bank of the United States? Are they not governed by the same instinct’ What makes them more immaculate ' The directors and officers, he presumed, were men very much like those of the United States Bank, liable to the same motives, and operated on by the same passions. And your Secretaries of the Treasury, are they to be saints or angels? With respect to corruption, he availed himself of the forcible illustration of a friend, the pungency of whose wit is equalled only by the soundness of his judgment. Putting down corruption by employing State banks in place of the 13ank of the United States, is like promoting temperance by establishing five hundred grog-shops in place of one wholesale grocery. Some gentlemen there, Mr. W. said, would be surprised to learn that this bill contained no security against the dangers of foreign capital and foreign influence. They had heard much of the mischiefs arising from these causes in the Bank of the United States, and he certainly expected that one of the first propositions in the regulation of the State banks would have been the exclusion of all those any part of whose capital was owned by foreigners. But the bill contained no such provision. It was not for him to offer any amendment of that kind. His opinion had been already expressed. The benefit arising from the employment of foreign capital, he believed, was mutual. We have the use of the money which we want, and the lenders the interest which they want. As to foreign influence, he o the danger imaginary. The action and reaction must be equal. When we have borrowed their money, it is their interest we should prosper, and we have security against them for the peace. But it
did appear to him that, if gentlemen intended to be true to themselves, if they meant to be thought earnest and sincere in their oftentimes-repeated denunciations of for. eign capital, now was the time to prove their sincerity. If there was danger in the Bank of the United States, where foreign stockholders have no vote, how much more must there be in State banks, many of which are under no such restriction? Neither can we be assured that the Secretary of the Treasury will make such a selection as to exclude banks with foreign capital; for in one of the banks already selected, he was informed, a foreign nobleman was one of the largest stockholders. In another State the whole capital of a bank has been raised by foreign loan; and, if he was rightly informed, that loan was secured by a mortgage of the real estate of the stockholders. A provision which he did think ought to be inserted in the bill, was one to distribute the amount of deposites, and limit the use of transfer cheeks. If the use of the public treasure must be granted to the State banks gratuitously, the banks of all the States should share the benefit with something like equality. Why should the banks in New York or elsewhere have an advantage in this respect? He mentioned New York with no invidious feeling, but merely because the largest amount of revenue being collected there, the banks of that State would have the largest amount of deposites, unless they were required to be distributed. Why should Virginia, and Ohio, and North Carolina, and Georgia, be excluded from their fair proportion of that fund to which they contributed their fair proportion? He was not prepared to say that a very exact distribution could be effected, but a rule might be found, in the representative population of the States, sufficiently near for justice and convenience. As to transfer checks, if the abuse of them were not limited, every bank employed would be at the mercy of the Secretary, and an unbounded field of favoritism and corruption would be opened. Mr. W, would draw the attention of gentlemen to another omission in the bill. It not only failed to provide for any examination of the State banks, coextensive with that to which they insisted the Bank of the United States ought to submit, but it failed to provide for any examination by Congress at all. How gentlemen who maintained the power of a committee of Congress to make a secret inquisitorial scrutiny into the individual accounts and private correspondence of the Bank of the United States could reconcile it to themselves deliberately to give up all right to order any examination whatever of those State banks to which the public money is to be lent gratuitously, in such proportions as the Secretary may direct, it was not for him to conjecture. By the bill, as it stands, the Secretary may examine, or appoint an agent to examine, but Congress would have no power to appoint a committee for any such purpose. He res. pected the sanctity of private correspondence; he approved the inviolability of individual accounts secured by this bill. The provision was a bitter commentary on the conduct of the gentleman’s own party; for if the individ. ual accounts and private correspondence of the State banks were to be sacred, why not those of the Bank of the United States? A committee of the gentleman's friends had reported resolutions to attach the president and directors of the Bank of the United States for assert. ing the principle ingrafted on this bill, and the gentleman sustains that report and this provision. Mr. W. desired private rights should be carefully respected, but he was not willing Congress should be deprived of all power to examine into the condition of the selected banks. With respect to the Treasury, the Executive had indeed almost become a unit, and Congress a cipher; he would not make it utterly so. The next objection to the bill was, Mr. W. said, to
Deposite Bank Bill.
his mind, a capital one. The selected banks were not required to receive each other's paper, even for duties or debts due the Government. The consequences were inev. itable; a multiplicity of local uncurrent currencies, each circulating only in its own narrow circle, and stagnating every where else, all depreciated in comparison with coin, and unequally depreciated with reference to each other. A paper receivable every where at par is to cease, and duties, collected in an unequally depreciated medium are no longer to be uniform, in despite of the constitutional injunction. Such is the better currency we were promised—such is the fruit of the President's experiment--such his reverence for the constitution! Even the measure proposed for the banishment of small notes was totally insufficient and illusory. If calculated to produce any effect, the committee should have followed it up. They should have required the selected banks not merely to abstain from is: suing such notes themselves, and to refuse the paper of any banks that did, in payment of dues to the Government, but also to refuse it in their general business. If it was expedient to discredit such paper, why not dishonor it altogether? We had the same right to impose one condition as the other. Enough of the remedy ought to be administered, if it were a good one, to make the cure perfect. In truth, however, he was far from thinking the small note circulation was to be cured by this nostrum. The only effect of the selected banks refusing to receive the paper of the small note issuers, would be to depreciate it, and a depreciated paper always usurps the circulation. Every one knew that—not excepting the Secretary and committee. It is distinctly admitted, in his letter and their report, as a law of circulation ; and the principle of the remedy they propose is in the teeth of the law they acknowledge. He was warranted in saying they had no great confidence in it themselves, since they suggested that the State Legislatures would aid us in this policy. Now, the States had granted numerous charters expressly authorizing the issue of small bills. , Would gentlemen inform him how they could be revoked? If the abolition of small notes were a wise and constitutional object, we must have the power to effect it by our own legislation. It was to him a conclusive objection against the exercise of any power, that the concurrence of the States was necessary. If we had it at all, we had it independent of the States. If we had it not, State legislation could not give it to us. The weakness of relying on assistance from that quarter would be well illustrated by one example. Massachusetts drew a large part (probably two-thirds) of her revenue from a tax of one per cent. on the capital of her banks. The banks derived much of their profits from the issue of small bills. What prospect was there that the State would voluntarily relinquish her revenue, or the banks forego their profits ' But the mode of abolishing small notes, suggested by the committee, is liable to an objection more serious than its impracticability. It proposes the introduction of a new political heresy. Men have held that the end justified the means. It was reserved for a committee to discover that the means sanctified the end. All the world have pronounced the first maxim false and wicked. If the second escaped condemnation, it would not be its plausibility that saved it. He meant to treat the committee fairly. What were their notions with respect to the currency? They admit that regulation by Congress is necessary, but deny that it is constitutional. They say that a mixed currency is inevitable, and a sound currency desirable; they grant that Congress has complete power over one element of a mixed currency, but insist it has no power at all over the other; yet they agree that, to operate on either, it is necessary to regulate both; and, in the absence of a constitutional power over the currency, they
Juxe 20, 1834.j Deposite Bank Bill. [H. of R.
propose effecting their object by a constitutional power of paper convertible into coin, the power of regulating over the revenue. the currency became an indispensable adjunct to the What had been the great argument against protective power of regulating the coin, because the value of the tariffs? That a power to lay taxes, given by the consti- latter could never be regulated without the regulation of tution for purposes of revenue, was perverted into the the former also. This, then, is what was meant by the means of effecting an end for which it was not given— words “regulating the value thereof,” and this power the encouragement of manufactures. extends to whatever currency may be in existence, proBut the friends of that policy had at least a consistent vided it affect the value of money. The possibility of system; they held that the protection of domestic indus- any currency, in modern times, which would not affect try was one of the objects contemplated by the constitu- the value of coin, may well be doubted. All eminent tion: they did not maintain that an unconstitutional end writers on this subject admit that, throughout the world, was legitimated by the use of constitutional means. the quantity of money has caused its depreciation, and The false doctrine of the committee involves us in a this depreciation, though owing mainly to the paper, has tissue of absurdities. What are they? The States have loft the coin also. The paper has gone down and not the right to coin money; but they have the right to carried the coin with it. coin the representative of money, and even to delegate From this clause in the constitution, therefore, the that right to corporations. They cannot make any thing power to regulate the value of money, and from the inbut gold and silver coin a tender in payment of debts; junction that all duties, imposts, and excises, shall be unibut they can authorize a paper issue, which makes a ten- form throughout the United States, is derived the conder in coin practically impossible, and therefore renders stitutional power of Congress to regulate the currency, a payment in paper inevitable. Congress have no con- and to provide for the existence of a circulating medium stitutional power to regulate this currency of paper ; but of uniform value. they have power to collect a revenue, and they may so That part of the bill which provided that the Secretary, manage the collection of the revenue, over which they for sufficient cause, might remove the deposites during have full power, as to regulate the paper currency, over the recess, and assign his reasons to Congress, wanted which they have no power at all. That is the argument. explanation. It was not said what was to be the effect of As to the proposition that we do not intend to affect the Congress approving or disapproving—what was to be the currency by legislation, but by contract, it does not de- consequence if one House approved and the other disapserve the name of an argument. We cannot, by our le- proved. The clause is like that of the sixteenth section gislation, authorize the Secretary of the Treasury to con- of the charter of the Bank of the United States. If the tract with the State banks for the exercise of an unconsti- meaning of it is that, unless Congress approve, the act of tutional power. the Secretary is annulled, then we may save ourselves all We are told, “Go to the constitution.” We are further trouble. The construction of the sixteenth secasked, Where do you find any thing about the curren- |tion must be the same, and Congress have not yet approvcy? Congress have power to coin money. But bank led the act of the Secretary in removing the deposites notes are not coin. You cannot say of them, that they from the Bank of the United States. Of course, they are coined. Under a power, then, of coining money, must go back again, and this bill is unnecessary. If this coining bank notes cannot be included. The power of is not to be the construction, what is it? That the act of coining money, however, is not the only one given by the Secretary, not being approved by Congress, or being this clause. Regulating the value of money is an author- approved by one House and disapproved by the other, ity also given. Evidently, this does not mean a regula. shall nevertheless stand good? Or is it that the Secretary tion of the fluctuating value of the precious metals them. shall merely report his facts and reasons, and there the selves when coined, as compared with other articles; be. matter ends--Congress having nothing to do with the cause the framers of the constitution well knew this was facts and reasons reported, but to listen to them? Will inpossible. In that sense the value of money depends the gentleman favor us with a true interpretation? upon the supply of the mines, and of the commodities for Mr. W. did not mean to be seduced, even by the which money is to be exchanged, the consumption of gold ||example of the honorable chairman of the Committee and silver in the arts, &c.; and all human legislation is of Ways and Means, into an argument on the merits or incompetent to regulate it. demerits of the United States Bank. Respect for a highNeither does it, mean, determining the fineness and |ly distinguished and virtuous citizen who had done the weight of the metal coined, because this is necessarily in- State some service, and whose retirement ought to be as cluded in the term “coining money.” You cannot coin tranquil as his public life has been useful, demanded a money without regulating its weight and fineness, and the word or two of explanation on the part of the gentleman's words “regulating the value thereof.” would therefore proceeding. The honorable gentleman had read a passage be words of supererogation. Congress, the convention, from the report of a former Secretary of the Treasury, and the people, were nearly as familiar with the princi- (Mr. Gallatin.) Mr. W. confessed surprise to hear Mr. ples of a convertible currency.then, as we are now. It Gallatin quoted against a bank. The gentleman must is impossible to look into the fugitive literature and poli. know, at feast every one else there knew, that Mr. G. had tics, the newspapers, familiar letters and pamphlets of more than once expressed himself strongly in its favor. that day, without perceiving it. They knew the conve. He distinctly admitted its convenience and utility. He is nience and advantage of a mixed currency, but they knew understood at this moment, after still longer experience also, in spite of many specious theories to the contrary, and larger observation, to maintain its necessity for fiscal that neither Government faith, nor receipt for taxes, nor purposes, and its constitutionality. The anxiety of the any other means but convertibility into coin on demand, honorable chairman to avail himself of such an authority would save paper money from depreciation. They knew proved that he felt its full weight with the public. Mr. also that, although paper money should be convertible Gallatin's opinions on the currency had, indeed, almost into coin on demand, at the pleasure of the "holder, yet, become the sterling standard. And where were we to by the issue of paper, the whole quantity of money is in. look for orthodox doctrines on this subject, if not to him creased, and the value of course diminished, and this dim- and Mr. Madison? These eminent persons could not be inution of value affects the coin as well as the paper, suspected of sinister motives. They had lived down all so long as the paper continues convertible. If the con. prejudice and detraction, and their fame was a portion vention, then, looked, as there is little doubt they did, to of every American's patrimony. How far one of them the existence of a mixed currency, consisting of coin and had been fairly treated by quoting a detached passage,