Mr. TEFFT called for the question.

Mr. BOTTS said he did not believe the House was prepared for the proposition which he had submitted in the course of his remarks. He would therefore withdraw it, with the intention of offering it in the House instead of the Committee, leaving a few days for reflection.

The question was then taken on Mr. Lippett's amendment, and it was adopted. The question recurring on the section as amended, it was adopted, as follows: 31. Corporations may be formed under general laws, but shall not be created by special act, except for municipal purposes. All general laws and special acts, passed pursuant to this section, may be altered from time to time or repealed.

The question was then taken without debate on the 32d and 33d sections, and they were adopted, as follows:

32. Dues from corporations shall be secured by such individual liability of the corporations, and other means, as may be prescribed by law.

33. The term corporations, as used in this article, shall be construed to include all associations and joint stock companies having any of the powers or privileges of corporations not possessed by individuals or partnerships. And all corporations shall have the right to sue, and shall be subject to be sued, in all Courts in like cases as natural persons.

The 34th section being under consideration, as follows:

34. The Legislature shall have no power to pass any act granting any charter for banking purposes; but associations may be formed under general laws for the deposit of gold and silver. Mr. GWIN moved to strike out all after the word " purposes," to the end of the section. He had a substitute to propose, but to avoid embarrassing the question would not submit it until the last section came up for consideration.

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Mr. NORTON. I would simply remark, before the vote is taken, that the object of this section is to afford protection to deposits of gold and silver. I, as an individual, may keep an office of deposit, receive gold and silver, and issue my certi ficates of deposit. No Legislature, no Constitution, can prevent me. Associations may do the same thing, and you cannot prevent them. Your laws can pre-, vent them, for they have a right to do it. The object of the section is to give to the Legislature the power of providing, in such manner as it may deem best, for the protection of persons in the deposit of gold and silver. Now, if laws can be passed affording this protection, rendering the depositories perfectly secure, it is much better than to depend upon individuals, upon whom no restriction is placed by the Legislature. This is all that the section attempts to attain. Mr. GWIN. It covers a great deal more ground than that. Banks can grow under it-banks of the worst kind; and for this reason I move to strike it out. I have heard one argument in favor of it, which may be worthy of notice. It is said that after we grow up to be a large commercial community, say in two or three years hence, such associations will be absolutely essential to the transaction of business. Sir, long before this necessity exists the people of California will meet in Convention and make another Constitution. In the mean time, when there is no pressing necessity for associations of this kind, I think it of the utmost importance that such a provision, upon which there is so great a difference of opinion, should not appear in this Constitution. I have heard a good deal of the exchanges of the country, and the necessity of these associations to carry them on. Look at the Island of Cuba, sir ; at Havana, where they collect eleven millions annually. The income of that city is eleven millions; and yet they have nothing of the kind there-nothing in the shape of banking. The State that includes the great commercial emporium of the valley of the Mississippi has inserted in her late Constitution a provision prohibiting such associations forever. It is my solemn conviction that banking institutions may spring up under this section. I look upon it as a duty that we owe to the country to strike it out. If the people want it hereafter they will put it in another Constitution. Let us not do it; let us be as nearly unanimous in regard to this Constitution as we can. There is a solemn conviction on the minds of the members of this Convention that any thing that gives the

slightest shadow of power to create banking institutions would be most injurious in its consequences. Let us, in accordance with that conviction, exclude from our Constitution whatever may, by possibility, produce that effect.

Mr. TEFFT. I am convinced there is an honest difference of opinion in regard to this matter. I believe that each member on this floor has the good of California in view. The Committee, I am sure, had no intention of reporting in favor of the banking system. There was a general feeling on the part of the members against permitting banks of any kind to be created under the powers granted to the Legislature. I entertained the belief when the subject first came up, and I still hold the same opinion, that the powers granted under this section cannot be abused. I believe such associations to be actually necessary in this country at the present period; that we need not wait for any future period to render them necessary. The fact that associations for the deposit of gold and silver now exist, is sufficient proof that they are necessary. They will continue to exist; they must continue as long as the community requires them. I look upon this clause as merely affording the additional security of legislative protection to the individuals depositing their gold and silver. I should most assuredly vote for the rejection of this article, did I believe for a moment that bank paper could be issued under it; but as I do not believe such to be the effect, I feel constrained to vote for retaining it as a necessary provision of the Constitution.

Mr. HALLECK. I agree with the gentleman last up, as to the necessity of this provision. The Committee were unanimous in their desire to prohibit banks for the circulation of bank paper, properly so called. When this article was introduced, I made inquiries of persons engaged in business as to the necessity of some legislative action on this point, and the propriety of providing for it in the Constitution. I was informed that such necessity did exist; and I believe the general feeling of the business community would be in favor of it. I shall therefore vote against the amendment striking out the last clause of this section. If it be necessary, in order to prevent the circulation of bank notes springing out of this clause, to add further restrictions, let us do it. It can very easily be done. There is an obvious necessity for these associations. They exist already; and it is proper they should be put under the direction of law, for the security of persons making deposits. If we pass the section as it stands, we can easily introduce after it such prohibitions against the circulation of paper of any description as the House think proper.

If

Mr. JONES. I shall detain the House but a few moments on this section. I think it hardly fair that two or three should speak on one side without something being said on the other side. The latter clause of this section contains, in my opinion, a system quite as dangerous to this country as banks. What responsibility are they to have? What is to prevent these associations from speculating on the money in their possession? We are told that there will be guaranties provided by law. Sir, I don't want to trust it to the Legislature. If we do, why not trust the whole subject-why put these restrictions upon the Legislature? Why not submit the whole banking system to the discretion of the Legislature? We are guarding here against bad Legislatures; we are not making provisions for good ones. we supposed them to be as wise and virtuous as they are represented to be by some gentlemen, we would put no restrictions upon them whatever. I want to see restrictions effective, and not merely nominal. We are told that associations for the deposit of gold and silver must be governed by law-that this subject requires legislative protection. Sir, it is governed by law; the best kind of law it is governed by the law which says that a man shall pay his debts, or loose his property and perhaps his personal liberty. But you build up an institution by special act; you build a man's reputation up by special act; you say he is entitled to receive deposits. Sir, a man who has wealth and standing does not require legislative enactments to make the community trust him. These deposits, if you leave them alone, will go where they ought to go; they will go into the safest and most re.

:

liable places that can be found. You are not required to set men up by legisla tive enactment. Will you say that these associations shall not issue certificates of deposit. How in the name of Heaven will these deposits be proved, unless by certificates? Will you say that they shall not word them so and so, put a picture on one corner, and make them look as much like bank bills as they please? You can do no such thing. They must become a circulating medium. These associations must enter into commerce, otherwise they cannot be supported. There is not a man in the community who would pay two or three per cent. to have his money kept and guarded. But these depositories-these traders upon borrowed capital-these men of small means combined together under legislative sanction will pay for these deposits. They will solicit them at a premium. They will not permit them to be idle in their vaults-for they cannot afford it. On the contrary, they will engage in active speculation. If they are unfortunate, they will appeal to this section and say they are individually liable to the amount of their stock. Sir, I want a man to be liable under the law as it exists. I want a man who owes a debt to be compelled to pay it. I don't want him to pay five thousand when he owes fifty thousand, pocket the forty-five thousand, and leave his creditors to suffer for their credulity.

The question being on the amendment of Mr. Gwin, to strike out the latter clause of the section, it was decided in the negative, by ayes 18, noes 19. The question then recurring on the adoption of the 34th Section,

Mr. GWIN offered the following amendment as a portion of the same section: "And the Legislature shall pass penal enactments for the punishment of the officers and stockholders of any association that may be formed under the authority herein granted, or any other person or persons who shall be convicted of making, issuing, or putting in circulation, any bill, check, ticket, certificate of deposit, promissory note, or other paper, or the paper of any bank, to circulate as money."

Mr. SEMPLE. I had not intended to make any further remarks on this subject, under the impression that it was sufficiently discussed. I voted to strike out the latter clause of this section, but there I must stop. I cannot support this amendment. I am in favor of all necessary restrictions to prevent any thing like banking; but I think the present restriction would be utterly impracticable. If we form associations, it will be absolutely necessary that they should issue certificates. We must have these evidences of deposit to put in our pockets, and sue them upon if they refuse to pay. If the managers of these associations choose to put pictures upon their certificates of deposit; it they put the goddess of justice on one corner, and a grizzly bear on another, I would be unwilling to make it a penal enactment, not because I am in favor of the circulation of this sort of money, but because it would be utterly impracticable to prevent the issue of these certificates. If I had ten thousand dollars which I desired to deposit with a friend, or association, or corporation, I should certainly require some memorandum acknowledging the deposit; and when I had that, it would be very hard indeed if I should not have the privilege of selling it, without subjecting myself to penal law. Such a restriction would be impracticable. Suppose I have no other means? I must sell it to pay my necessary expenses, or dispose of it in some shape or other. I carry it to some gentleman in town and ask him to give me the money for it. But, for doing this, I am liable to be put in the penitentiary. If it be the disposi tion of the Convention to permit these associations at all, they must be permitted to issue certificates of deposit. I voted against all the preceding articles be. cause I want no banks or bank paper; but this section would be an absurdity with the restriction proposed.

Mr. GWIN. I am sorry the gentleman flinches so soon in the argument. If it is not intended to pass the certificate of deposit for money, there is no restriction. No man maintains that it should be used as a currency. If, therefore, it is not intended to make a currency of it, what objection can there be to provide in this section that no paper shall ever circulate as money, and if it is done, that it shall

be a penal offence. Gentlemen talk about depositing gold and silver and receiv ing certificates as indispensable proof of the deposit. Why, sir, deposits to the amount of millions of dollars are made without certificates. If you want to use your money elsewhere, you get a bill of exchange. The commercial business is carried on by hank books. There is not one out of a hundred cases where certificates are issued. In this country a man can carry enough of gold to pay his expenses, without such papers. If it is the intention of gentlemen, by inserting this section, to prohibit the circulation of paper money, the clause which I propose will be actually necessary to carry out the object; but if certificates of deposit are to be used as they have been used under similar associations, if they are to be passed as money, they will vote for the section as it stands. Those familiar with the banking era of 1834, 35, and '36, know that certificates of deposit and post notes were circulated to the amount of millions of dollars, for the purpose of avoiding the law. There were several banks in the District of Columbia whose charters expired in 1839. The most extraordinary exertions were made to re-charter them. At one time they even attempted to accomplish the object by tacking a provision for their continuance to the appropriation bill. When the charters ex

pired, they transferred over to trustees the whole of their assets, and now they are transacting business as they did before, although they have no authority under the law to issue bank paper. The greatest caution is necessary to prevent associations of this kind from encroaching upon the rights of the people. I trust, sir, that every member of this Convention who does not intend that paper money shall be issued, will vote in favor of the amendment.

Mr. Borrs. I have seen the result of a trial in a court of justice upon ex. actly such a penal clause as is proposed by my friend from San Francisco, (Mr. Gwin.) I have seen a penal law which prohibited an individual from issuing his promissory note, check, or bond, for the purpose of circulating as money. It turn ed, as it ought to have turned, simply upon the intent. All the circumstances under which these shinplasters were issued went to the jury. The individual had issued his checks in printed form, in great numbers, and of small denominations. From these circumstances it was evident they were intended to circulate as money, and the individual was accordingly fined. They could come to no other conclusion. The paying of a washerwoman's bill, or board bill, or any other, such as the gentleman from Sonoma (Mr. Semple) referred to, is not such a circumstance as would lead to this conclusion. But there may be circumstances, and they do exist, such as every gentleman here seems desirous to provide against. I look upon that clause, as it stands, as fraught with evil. It is the wooden horse introduced by the Greeks within the walls of Troy, from the body of which will come forth thousands of armed men. Sir, I fear the Greeks when they proffer gifts, and I very much fear there are Greeks in the midst of us.

Mr. TEFFT. I consider the gist of that amendment, as offered, a fair test of my sincerity. I am entirely and absolutely opposed to the circulation of any sort of bank paper. But if I do not misunderstand the effect of the amendment I shall certainly oppose it. I was in Wisconsin when the first Convention was called to form a Constitution for that State. In that Convention there were some of the strongest anti-bank men I ever knew, and a clause was inserted in the Constitution providing against the circulation of any kind of bank paper. They made it a penal offence for any person to have in his possession a bank bill, or attempt to pass it. That Constitution was rejected by the people. Another Convention was called, and that Convention inserted in the Constitution an article precisely similar, omitting the penal offence. Now, I am willing to go as far as the gentleman from San Francisco, or any other gentleman, in prohibiting banks or the circulation of bank paper, but I cannot vote for the amendment making it a penal offence to pass a certificate of deposit. The question of currency is one of momentous import. It should never have been made a party question in the States-subject to the fluctuating influences of political factions. The financial policy of a coun

try is too intimately associated with the best interests of the people to be rudely touched. It is only by carefully observing the different systems which have been in operation that we can arrive at a just estimate of what it is our true interest to adopt. I am very sure, sir, that no member of this Convention can be blind to the disastrous results of the banking system, where it has been subjected to the test of experience, as in the late era of our banking history. Nor do I believe, whatever opinions gentlemen may have held in the parent States, that there is any latent desire on the part of any member of this Convention to introduce the system into this country. I think there is no dissimulation on this subject, for if ever there was a country on the face of the earth designed by the Creator to have a metallic currency it is this. We have not been so richly gifted with the precious metals for the purpose of introducing a fictitious medium of circulation. It is not for us to turn from those resources which nature has placed within our reach, and enter upon a policy so clearly in opposition to our interests. But, in attempting to effect the object which we all have in view, we should carefully avoid running into the other extreme of excessive and onerous restrictions, which, from the necessity of the case, can only result injuriously to the commercial interests of the people. No legislation which goes beyond judicious limits, or makes it a penal offence to exercise rights so generally acknowledged, can have a beneficial effect; nor will it in any degree tend to lessen the evil which it is our desire to avoid. The absolute necessity of permitting the transfer of these certificates of deposit, for the legitimate purposes of business, and the impracticability of administering penal laws for the punishment of persons who may so dispose of them, are sufficient reasons, in my opinion, why this amendment should not be adopted. Mr. SEMPLE. I do not wish to detain the House, but I desire to be fully understood on this subject. With regard to the manner in which business is transacted in the Island of Cuba, it is the custom there for every merchant, who has reputation enough, to receive deposits. I know no better way to explain the operation of the system than to state my own experience. I visited Cuba in company with a family-a sick gentleman and his lady. Our money consisted of gold and silver and Alabama bank bills. The bank bills were worth nothing there. We went to one of the best merchants, deposited our specie with him, and told him that some of the money we wanted in a large amount to pay our expenses home, but the most of it we wanted to defray our immediate expenses. He gave us certificates of deposit as low as five dollars-some of ten, twenty, and fifty dollars, for temporary

use.

With these we paid our board and ordinary expenses. The whole check for the large amount which we required for expenses home was given in duplicate. The certificates only went as far as his acquaintance reached. We passed them seventeen miles out in the country where we had occasion to use them. That is the system upon which business is conducted in Cuba. They never had a bank, and never carried on banking. In this country, if we have associations of deposit, we must have certificates. The gentleman (Mr. Gwin) says this is done by bank books. That is in cases where the same individuals or firms make deposits almost every day. But suppose I arrive at New York a stranger, and want to deposit my money. I have no bank account, and do not desire to open one. I take a certificate of deposit and put it in my pocket. This I believe is the course usually pursued. Another thing: I have seen the banks in Alabama give certificates of deposit to be sent to the East-not drafts, but pure certificates. A laboring man who worked for me wanted to know how he was to send seventy or eighty dollars to his wife in Philadelphia. I went to the bank with him, but the teller said the amount was too small for a draft. To accommodate the man, he took the money and gave him a certificate of deposit, which certificate was cashed by a bank in Philadelphia. Now, sir, if you make it a penal offence for a man to carry a certificate of deposit in his pocket, I think it will be a very dangerous provision. This Constitution will be rejected by the people. I think I shall vote against it myself when I get home. may or may not intend to circulute it as money. The only proof of his inten

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