The section, as amended, was then adopted by yeas and nays, as follows: YEAS.-MESSTS. Aram, Botts, Brown, Carrillo, Covarrubias, Crosby, Dent, De La Guerra, Dominguez, Ellis, Foster, Gilbert, Gwin, Hanks, Hoppe, Hobson, Halleck, Hastings, Jones, Larkin, Lippitt, Moore, McCarver, Norton, Pico, Rodriguez, Reid, Sherwood, Shannon, Stearns, Sansevaine, Tefft, Wozencraft, President.-34.

NAYS.-Messrs. McDougal, Price, Vallejo-3.

Mr. MCDOUGAL submitted the following as an additional section, to come in after section 31:

Any one member of either House shall have liberty to dissent from and protest against any act or resolution which he may think injurious to the public, or any individual or individuals, and have the reason of his dissent entered on the journal.

The question being taken thereon, it was decided in the negative.

The 32d section was adopted as reported by the Committee on the Constitution. Mr. LIPPITT moved to amend the 33d section by substituting in the last line thereof, the word “manner " for the word " cases.

The question was decided in the negative, and the section adopted as reported. The 34th section as amended by the Committee of the Whole, 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. But no association shall make, issue, or put in circulation, any bill, check, ticket, certificate, promissory note, or other paper, or the paper of any bank, to circulate as money.

Mr. BOTTS said: I propose to offer a substitute for that section and amendment. I offered it in Committee of the Whole, and I offer it here more for the benefit of posterity than for the present. Nor am I going to make a speech, for I do not think this House at present would listen to Moses on the mountain. The question of currency is one of the most important that we have considered, or that can be considered here. The currency of the country should be taken under the guardiancy of the law; to leave it free to the action of individuals has been found to be attended with the greatest of evils; and to counterfeit the coin of the realm has always been punishable in the highest degree known to the law. Sir, it is one of the greatest objects of government to guard the currency and keep it pure ; particularly is it necessary when that currency ceases to be gold and silver coin, and becomes a paper currency. I lay it down as a proposition hardly to be questioned that in every great commercial community, you must necessarily have a paper currency of some sort or other. I will relate to you a circumstance that occurred within my own knowledge, within the last four or five weeks, as illustrative of this fact-the necessity of a paper currency. I received a draft from a gentleman in San Francisco, drawn upon one of the most respectable and staunch houses in Monterey, and I received a note from my correspondent stating that it was extremely desirable to have the money remitted as soon as the draft was paid. I drew at once; the person upon whom the draft was given said to me, here is your money. He presented me with a bag of silver dollars; from that time to this, I have not had an opportunity of transmitting the money to the gentleman to whom it belongs. If any individual here had issued notes, I should have been induced to take them. Bank paper, or a circulating medium more portable than gold or silver, will, in some way or other, get into circulation. You cannot transport gold and silver, especially where you have no railroads and steamboats. You must have some substitute for it. The most I ask to do is to give you a good substitute for it instead of a bad substitute, which you will inevitably have if you attempt to prohibit the circulation of all kinds of paper. I believe this is the origin of all banks-the absolute necessity of a convenient and portable circulating me. dium. If you do not provide a good and wholesome currency, in spite of all your restrictions in the Constitution, you will have paper, you must have paper. The substitute which I propose is this:

It shall be the duty of the Treasurer of the State to receive on deposit gold and silver, either coined or in bullion, and to issue certificates for the same, redeemable on demand at the Treasury in gold or silver coin, under such restrictions and upon such terms as the Legislature may prescribe. But no certificate of deposit shall be given for any sum less than five dollars.

The issuing of bills, checks, or promissory notes, or other paper to circulate as money, shall be taken to be a felony, and shall be punishable as such; and for any criminal or felonious act committed by a corporation, the President and Directors, or other managers, shall be held personally liable.

Another reason is this; you want a mint in California; you cannot have one ; you cannot get it. As stated on the floor of Congress, it would take three years to prepare the machinery for a mint; you cannot have one in three years, nor can you have it at all, because the expense of labor required to conduct it would be too great in this country. That labor must be paid at California prices, and the Government of the United States, if it pays for it, will charge it to the individuals whose money it coins; that is the universal rule. To coin your money here will cost you so much more, that you will send your bullion to Philadelphia to be coined there, just as you send your hides to be manufactured where it is done cheapest. I say, then, you will not have a mint here, and I say this is the best substitute that you can devise for a mint. Now, sir, I want to see whether the gentlemen who were talking this morning about gold diggers, are willing now to adopt this to secure the working men from the sharpers and shavers of San Francisco. I disavow the application to any gentleman in this Convention.

Mr. LIPPITT. I am so ignorant of this subject that I shall say but one word. It strikes me that the amendment just proposed by my friend from Monterey (Mr. Botts) is open to a constitutional objection. The object of it is, if I understand it, to give us a sort of State bank; to make the State Treasurer cashier of that bank; to allow any individual to go and deposit his bullion or money, and receive from the Treasurer a certificate of deposit. That gives us a much safer and better currency than we can get from irresponsible corporations or individuals; but the great difficulty that I have at present is, that it conflicts with that clause of the Constitution of the United States which prohibits States from emitting bills of credit; and I think the term bills of credit has already received judicial decision; that a bill of credit is anything that amounts to a promise to pay at any time, any paper which can circulate, which is negotiable, merchantable, and entitles the bearer or the present holder to receive the payment of a particular fund. That I believe the Supreme Court has decided to be the meaning of bills of credit in that clause of the Constitution. If so, it strikes me that the amendment proposed as a substitute is open to that objection. I go further; on the ground of expediency I think we had better not have even that kind of paper. I am so totally opposed to any paper currency whatever, that I am even opposed to the section as reported by the Select Committee, even with its amendment, which qualifies it. It appears to me, Mr. President, that the clause in the section which allows the creation, under general laws, of associations for the deposit of gold and silver, brings you at once to the very evil in another shape, which you wish to avoid in the shape of bank notes. Instead of having bank notes you will have certificates of deposit; and I want to know by what constitutional enactments you are going, after creating these certificates, to prevent them from circulating from hand to hand, as much as if they were United States bank bills. I shall, therefore, go against the whole section, as amended by the Committee of the Whole. I think the amendment that I have just referred to is nugatory. The depositor must have something to show for his deposit, and whatever he has must circulate as money. On motion the House took a recess till half-past 7 P. M.

EVENING SESSION, HALF-PAST 7 O'CLOCK.

At 8 o'clock, the President called the Convention to order, when it was evident that there was not a quorum of members present.

Mr. GWIN moved for a call of the House, with the understanding that some measures should be taken to compel the attendance of the absentees, and inflict some punishment upon them. The Convention had nearly terminated its labors, and it was necessary that members should be punctually in their seats in order to expedite the transaction of business.

The roll was then called, when it was found that there were twenty-five mem. bers absent.

On motion of Mr. Gwry, the Sergeant-at-Arms was furnished with a list of the absentees, and directed to bring them into the Hall.

After a brief lapse of time the Sergeant-at-Arms returned with several mem. bers.

Mr. GWIN said, that as a quorum of members was then present, he would move that all further proceedings be suspended; which was agreed to.

The Convention then resumed the consideration of the Article on the Legisla. tive Department, the question pending being on the amendment of Mr. Botts.

After some debate on the same grounds taken in Committee of the Whole, the substitute was rejected. The amendment adopted in Committee of the Whole, to the section, was then discussed at length.

Mr. SHERWOOD opposed the amendment, and maintained the necessity of adopt. ing the original section as reported by the Select Committee. He contended, that in a community such as that of California, it was absolutely necessary to have some circulating medium, and that the certificates of deposite, as provided for by the original resolution, would be used as such, and were absolutely necessary. If the amendment was adopted this would be prevented entirely.

Mr. Gwin was astonished at the gentleman for wheeling round as suddenly as he had, advocating banking principles, and expressing himself in favor of creatng a circulating medium of paper-a paper currency. He thought the gentleman must have received some encouragement from some unknown quarter, to have induced him to go so far. It was very evident that there was a desire creeping into the Convention, to permit the issue and circulation of certificates of deposit, which was a banking system of the very worst character. He was astonished that he (Mr. Sherwood) should get up and say, that the commerce of the country could not be carried on without some such circulating medium, when it was known that the entire system was being rapidly rooted out in the United States. Iowa, New York, and Louisiana, had all done away with the entire banking system in their Constitutions, and he would ask if it was more necessary here than there. To give the Convention an idea what the opinion of one of the best and soundest financiers of the country was upon the subject of the simple issue of certificates of deposit-not from an association or corporate body as a paper currency-he would read the argument of Mr. Walker in favor of establishing a branch mint in the city of New York:

"With a branch mint at New York, the transactions of business would be undisturbed by the operations of the constitutional treasury. It is true, that even with such a branch there the collection of duties in specie would operate as a check, not upon the issues, but upon the over-issues of their banks; a gentle and most useful check, restraining their over-issues, and mitigating if not preventing those revulsions which are sure to ensue when the business of the banks, and as a consequence that of the country, is unduly extended. Credit is useful and most abundant only when it is based upon capital and specie and a legitimate business and commerce. But when it is stretched beyond those limits, it necessarily produces revulsions, disastrous not only to the parties involved, but to the commerce and business of the whole country. It is this fatal tendency to overissues, and the too great and dangerous extension of their business, which constitute the greatest objection to our banking system; and those banks which are based on a sound capital, and desire to conduct their business advantageously to themselves and to the country, ought to rejoice that such others as would transcend these limits are checked and restrained by the demand for coin created by the specie receiving and specie circulating constitutional treasury. During the year 1847, when more than twenty-four millions of specie were brought into the country, and to a great extent paid in for duties and loans to the government, had this coin gone into the banks, as under the old State bank deposite system to a great extent it must, and have been made the basis of an

inflated currency, far exceeding that of 1836, it would have been followed, upon the sudden fall of the price of our breadstuffs and staples, and the turn of exchange and flow of specie out of the country, by a revulsion more disastrous than that of 1837. The fall would have been from a greater inflation to a lower depression, the intensity of the disaster being augmented by the loans and expenses of a foreign war, by the drain of specie to sustain immense armies in foreign countries, by depreciation of government loans and the fall of the government credit. The public credit under that system being inseparably connected with that of the bank as its depositories, the government having no specie and depending upon their paper, its credit must have fallen with that of the banks, as happened in 1837, and during the war of 1812; and loans for specie (which were indispensable) could only have been obtained, as they were during that war, at ruinous discounts amounting to millions of dollars per annum. Instead of these sacrifices, the public credit was maintained throughout the war, and its stocks sold for high premiums instead of ruinous discounts, the total premium realized by me for the government being $545,511 39."

Mr. BOTTS said that gentlemen must do either one thing or the other-they could not be on both sides of the fence at the same time; they could not ride on two saddles at once. They must either take the clause of the original section as a banking clause or as an anti-banking clause. When the matter came up in Committee of the Whole, the gentleman from Sacramento said there was nothing like banking contemplated in the section-oh, no, nothing at all! Nothing of the kind was intended; it couldn't be so construed; there wasn't a squinting that way. They said, the whole Committee, chairman and all, there wasn't any banking contemplated; the chairman said so―he knew it; he swore to it. He hated all banking, could not bear the very idea; the Committee hated it. He (Mr. Botts) thought the chairman must have forgotten the gentleman from Sacramento. The Committee all had such a holy horror of banking that they interposed but very little objection to the restrictions imposed in the Committee of the Whole; but now gentlemen were compelled to show their hands, the cloven foot appeared. He was glad of it; there was now a chance of a fair fight. Gentlemen were disposed to come out now openly and say that banking was a very good thing, an excellent thing, and never could do the least possible harm in the world. He was afraid the members of the Committee had been imposed upon. The chairman had been imposed upon-they had taken advantage of his credulity. Good, easy soul, he had hever dreamed that banking could creep in; and he (Mr. Botts) really felt for him. He was afraid the chairman had not investigated the matter tho roughly. To show how easily the bank monster could come in, he would read the section. The first sentence provided that no corporation should be allowed with banking priviliges. There he was afraid the gentleman had paused; but if he proceeded a little further, he would find that "associations" could be formed"associations" which issue certificates of deposit.

Mr. BOTTS then continued his argument in opposition to the original section and in support of the amendment, urging the same points which he had offered in Committee of the Whole.

Mr. NORTON said that he had not intended to say any thing upon the subject; but inasmuch as he had been alluded to, he would say a few words. The section as reported from the Select Committee, prohibited the Legislature from char. tering corporations for banking purposes, and he had thought that amply sufficient at the time, and he thought so still. He was opposed to the banking system entirely. There were other sections in the report which declared positively that there should be no associations for banking purposes. He opposed the amend ment because he then thought the section was strong enough, and he thought so still. It was necessary to permit the issue of certificates of deposit, and no law could be made to prevent it-it was illegal and unconstitutional. It could no more be done than could mercantile transactions be restricted-the issue of promissory notes prevented. Certificates of deposit issued by individuals were already in circulation, and they could not be stopped. If associations were not allowed to issue certificates by law, private individuals would issue them.

Mr. JONES said that he would not have said a word, if it had not have been said that this paper circulating medium could not be restricted-that the people had no

right to destroy this great bank humbug. Such an idea was absurd-it could be destroyed; it had been, and he hoped it would be annihilated in California. He was also glad to see the bank men out. In Committee of the Whole, they had evinced a holy horror of banks and of paper as a circulating medium; now they had changed ground and come out boldly, and he would call for the yeas and nays when the question was taken, that they might be recorded in black and white. He would ask what was the object of these associations, if not for banking purposes? Would they do nothing more than receive the deposits and take their four or five per cent. for the purpose of keeping it safe, and counting it over and seeing that it was all right? No! These associations would be composed of small men of small means who required a special endorsement for the Legisla. ture, that they were good and responsible men. They would take the money deposited with them and use it-they would loan it out-they would speculate with it-they would enrich themselves with its use. But suppose their speculations failed, what would become of the poor man, who, after months of hard toil in the mines, had deposited his little earning in the coffers of the association! Why the individual stockholders were held responsible, but unfortunately, he would find that these individuals were not exactly responsible, and that he would lose every thing. By the proposed section, unless taken with the amendment, there was not a single guard against banking. A private individual would be a much more safer reliance than these specially endorsed associations. The capitalist needed no such special act of the Legislature. The clause as proposed by the Committee was in its operation the most general, the most infamous clause that was ever penned; and he hoped no gentleman would come out in its favor who was not ready to say fairly he was in favor of a bank.

Mr. TEFFT was in favor of the section as amended, as it was thought that the original section was not sufficiently strong.

Mr. HALLECK had voted for the original section because he had supposed it strong enough; but when in Committee of the Whole it was suggested that it was not strong enough, he had himself proposed the amendment which was adopted, and the members of the Select Committee generally had voted for it. He merely made this statement because an imputation had been cast upon the motives of the Select Committee, in reporting a section which would admit banking.

Mr. LIPPITT gave notice that in case the Convention rejected the original section and amendment, he should offer a substitute combining the original section and the amendment, rejecting the clause which would admit banks.

Mr. PRICE was opposed to banks and corporations, or associations with banking privileges, and thought too many restrictions could not be imposed. He spoke at some length in support of the section as amended, and concluded by hoping that the record would be kept free of anything that could be construed into a toleration of banking.

Mr. WOZENCRAFT inquired whether it would be in order to move, before action on the amendment of the Committee of the Whole, an amendment to the original section; and being answered by the President in the negative, gave notice that he should move, after the vote had been taken on the amendment reported by the Committee of the Whole, to strike out of the original section the words "but associations may be formed, under general laws, for the deposit of gold and silver.” Mr. McCARVER was in favor of the section as amended.

Mr. SHERWOOD spoke at some length to show that there was nothing like banking intended, but that it was necessary to have certificates of deposite legalized and permitted to circulate. He concluded by saying that a false issue had been raised, and that an attempt was made to humbug the Convention. That if any such frauds as those anticipated were practised, the perpetrators would be punished for felony.

Mr. Borrs said that he had an indistinct recollection of an institution called the United States Bank which broke one day, but he did not recollect that Mr. Nicho