JAN. 27, 1837.]

Treasury Circular.

[SENATE.

days thereafter, metamorphosed into a reservation of au- lars; and, also, to promote the circulation of gold, by thority to impose a future restriction-a change which paying all the currency issued by it in gold and silver; Mr. B. considered as defeat and mockery-for he knew the proportion of each at present according to the best full well that wherever a bank was strong enough before- ability of the bank, and eventually one half of each, the hand to prevent a limitation upon its issues from being | demander to have the option of one half of either metal, prescribed as a condition, it will be sure to be strong and the bank the other half." Laid on the table, on the enough, after it gets the charter, to prevent the same motion of Mr. Mangum. limitation from being imposed as a restriction.

He also read from the journal of the session of 1835-'6 a set of instructions for amending the charters for the banks in the District of Columbia, of which the fourth instruction was this: "The banks to issue no notes of less denomination than twenty dollars; and all notes below that denomination, issued by other banks, to be prohibited from circulation within the District;" which was rejected by the Senate-10 yeas, 28 nays. He also referred to the twenty-dollar limit on payments from the Government, which he moved at the last session, and which, in a modified form, was adopted; and he referred to a bill which he had introduced at the last session of Congress, "to re-establish the currency of the constitution for the Federal Government;" and alluded to his constant efforts to limit, restrain, and circumscribe, the circle of paper circulation, and to extend and increase that of the gold and silver circulation.

Mr. B. had thus corrected the error of the Senator from Kentucky, [Mr. CLAY,] in claiming the paternity of the first movement for the twenty-dollar limit on the floor. In the correction of that error, he had to exhibit himself as the author of the movement; but he attached but little consequence to priority of movement on such a subject, or on any subject. It was the gift of continuance which he valued. It was the faculty of holding on which he loved. It was the Cynegiras stick-to-it which he admired; that sticking to it which lays hold with the right hand, and when that is cut off, lays hold with the left; and when that is cut off, lays hold with the teeth, and hangs on by the teeth until the head is cut off. This is what he called the gift of continuance, and which he valued above all gifts. The Senator from Massachusetts [Mr. WEBSTER] did not seem to have been endow ed with this gift in respect to this twenty-dollar limit. His speech, indeed, was good; his first vote was good; but his second was bad, for it nullified the first; and his speech had never been backed by another. On the other hand, he (Mr. B.) must be allowed to say that he had himself shown a little of the Cynegiras blood in relation to this limit. He began it five years ago, and had been sticking to it ever since. In Congress and out of Congress, in season and out of season, he had been stillly harping upon these small notes. Not to worry the Senate with tedious recitals, and yet to vindicate his adhe sion, and to make good, at least, a continued claim to this work, he would refer to a few of the evidences which attested the fidelity of his exertions to accomplish this object. Mr. B. then read from the Senate journal, as follows:

"Wednesday, April 9, 1834, the following motion, submitted by Mr. Benton, was considered:

"Resolved, That a committee be appointed on the part of the Senate, jointly with such committee as may be appointed on the part of the House of Representatives, to consider and report to the Senate and to the House, respectively, what alterations, if any, are necessary to be made:

"1. In the value of the gold coined at the mint of the United States, so as to check the exportation of that coin, and to restore it to circulation in the United States.

"2. In the laws relative to foreign coins, so as to restore the gold and silver coin of foreign nations to their former circulation within the United States.

3. In the joint resolution of 1816, (for the better collection of the revenues,) so as to exclude all bank notes under twenty dollars from revenue payments after a giv. en period, and to make the revenue system of the United States instrumental in the gradual suppression of the small-note circulation, and the introduction of gold and silver for the common currency of the country.

"On motion of Mr. King of Alabama, "Ordered, That the said resolution be laid on the table"

Mr. B. said there were many other motions on the journals to the same effect; but he would not consume time in reading them. Much less would be read from his speeches, running through a period of five years, and dwelling so much on this particular point. He would only refer to one of these speeches, the one on the District banks, of the last session, in which the reasons for suppressing the small-note currency were largegone into. He would read a paragraph only, to show the heads of the argument which he then used:

"Mr. B. said that the proposed limit of twenty dollars for the minimum size of bank notes was not an arbitrary assumption, or a fanciful designation, but was a limit ascertained by experience, and proven by results, to be the lowest that would suffice to accomplish the ends intended. These ends are: 1. To re-establish the gold currency; 2. To make gold and silver the common currency for all the small dealings of the country; 3. To extend and enlarge the specie basis of the paper circulation; 4. To save the laboring and small dealing part of the community from the effects of contractions and expansions from bank issues; 5. To save them from the impositions of counterfeiters, from losses when banks fail, and from bearing the whole burden of the wear and tear of small notes; 6. To save hard money enongh in the country to make it safe to have such paper currency as commerce and large dealings may require. These are the objects to be accomplished, and less than twenty dollars will have no adequate effect; far better would be the limit of $100, as it is nearly in France, and where that limit insures a circulation of nine tenths gold and silver, and one tenth paper; namely, upwards of five hundred millions of dollars of one, and fifty millions of the other.”

From this brief but authentic history of the movements in this chamber against the small note currency, Mr. B. said it would be seen how fallacious was the claim set up by Mr. Biddle, in his panic letter of November last, to the honor of commencing these movements. So far from it, it was now established that it was the Mr. B. also read from the journal of the same session conduct of the Bank of the United States, in deluging a resolution submitted by him, as follows: "That the the country with a small-note currency, and eviscerating President of the United States be requested to cause in- the States of their specie, and exporting it to Europe, that quiries to be made of the deposite banks, and of other caused him to move first upon the subject; and that that banks of good credit, to ascertain when any of said movement, after being apparently acquiesced in by the banks, in consideration of being made or continued de- bank, to aid in getting the renewed charter, was defeatpositories of the public money, will agree to enter into ed and made ridiculous by being diluted into a reserved arrangements to discontinue the use and circulation of authority to do afterwards what the bank would not perall paper currency of less denomination than twenty dol-mit to be done then. Mr. B. averred that it was the

SENATE.]

Treasury Circular.

[JAN. 27, 1837.

conduct of the Bank of the United States in inundating the balance at the commencement of the year, and exthe States with small trash, in the shape of branch drafts, cluding the proceeds of loans and Treasury notes, will that first put him upon the idea of suppressing small amount to about the sum of $47,000,000; that during notes. It showed him the evils of that circulation, and the same year, the actual payments at the Treasury, in subsequent inquiries proved its extent. Subsequent including the payment of the arrearages of the War Dequiries showed that the Bank of the United States had ab- partment, as well as the payment of a considerable exducted about forty-two millions of specie from the States, cess beyond the annual appropriations, will amount to and exported it to foreign countries, leaving in the whole about the sum of $38,000,000; and that, consequently, Union, at the time of the application for a recharter, at the close of the year, there will be a surplus in the in 1832, no more than twenty or twenty-two millions of Treasury of about $9,000,000." specie. This was her conduct; and what has been the Extract from President Monroe's annual message, the first conduct of President Jackson's administration? It has Monday of December, 1817. been to increase that twenty millions, in about four years, to about eighty millions; and to do this against the constant and strenuous opposition of the Bank of the United States and all its friends. After this, what a power of face it requires in the president of the Bank of the United States to claim for that institution, and its friends, the honor of fighting down small notes, and fighting up gold and silver! But why go back to past events? The present are sufficient. Did not that bank obtain from Pennsylvania a charter to issue notes below twenty dol lars, namely: notes of ten dollars? And does she not daily and openly violate even this limitation by issuing

notes and drafts of five dollars?

It was

Mr. B. had felt himself forced into this episode upon the suppression of the small-note currency. It was the first time that he had troubled the Senate with a detail personal to himself, and hoped it would be the last. The suppression of small notes, though a novelty here, is an old operation elsewhere. In France, where paper money during the revolution was reduced to its smallest denominations, even to ten sous, he believed, all had been suppressed, as far back as the consulship of Bonaparte, under five hundred francs. In England, where one and two pound notes prevailed for above twenty years, a general suppression took place years ago. About the year 1819 was the commencement of the great movement in E gland. It was then Mr. Canning cited the letter which Mr. Burke had written to him twenty years before, and from his deathbed. then also he delivered that sentiment, which was among the few which ever produced, in the British House of Commons, an expression of applause in the galleries; an applause which was elicited, not by the theatrical exhi bition of the orator, but by the sentiment of the statesman; and which was followed by a national effect all over the British empire. It was that sentiment in which Mr. Canning hoped that the day was at hand when every laborer, returning from his work at the end of the week, would feel the weight and hear the jingle of his wages in his breeches pocket; and it was this sentiment, taken up by the body of the people, and acted upon by them, which led to the immediate suppression of the one and two pound notes in several parts of England, and to their eventual suppression all over the empire..

Mr. B. wished to point out to the Senate the great similitude which existed between the present state of things in our country, and that which existed about twenty years ago. There was instruction to be derived from the retrospect, and he would use the highest authority for the fidelity of the picture which he proposed to recall. He would have recourse to the highest offi cial papers-the messages of Presidents to Congress; and would read the parts which were applicable to his purpose. He read:

Extract from President Madison's annual message at the meeting of Congress, the first Monday of December,

1816.

"It has been estimated that, during the year 1816, the actual receipts of revenue at the Treasury, including

"A considerable and rapid augmentation in the value of all the public lands, proceeding from these and other obvious causes, may, henceforward, be expected. * * The public lands are a public stock, which ought to be disposed of to the best advantage for the nation. The nation should, therefore, derive the profit from the continual rise in their value."

Extract from President Monroe's annual message, the third Monday in November, 1818.

"The sale of the public lands during the year has of any former year; and there is just reason to expect a also greatly exceeded, both in quantity and price, that progressive improvement in that source of revenue."

This is the picture for 1816-'17-'18; and a glowing one it is. The Treasury full and overflowing; fortyseven millions of revenue in one year; thirty eight mil lions paid out; nine millions of surplus on hand; public lands selling with unprecedented rapidity; the sales for 1818 being seventeen millions of dollars; which, in proportion to the population, were larger sales than those of the last year, when twenty-five millions were received. At the end of the year 1818, this gorgeous picture of Prosperity still augmenting, and the President so elated with the prospect of income fron the lands, that he advises their price to be raised from two dollars per acre, which was then the minimum, to a sum not stated in his message, but understood to be five dollars; and concludes with expressing his opinion that there was just reason for expecting a progressive improvement in the sales of these lands. Now, said Mr. B., let us resume our readings, and see what manner of picture is presented by the same President in the ensuing messages. He

read:

Extract from President Monroe's annual message at the meeting of Congress, December, 1819.

"Although the pecuniary embarrassments which af fected various parts of the Union, during the latter part of the preceding year, have, during the present, been considerably augmented, and still continue to exist, the receipts into the Treasury to the 30th of September last have amounted to $19,000,000. * The causes which have tended to diminish the public receipts could not fail to have a corresponding effect upon the revenue which has accrued upon imposts and tonnage during the first three quarters of the present year.

*

The great reduction in the price of the principal articles of domestic growth, which has occurred during the present year, and the consequent fall in the price of labor, apparently so favorable to the success of domestic manufactures, have not shielded them against other causes adverse to their prosperity. The pecuniary embarrassments which have so deeply affected the commercial interests of the nation have been no less adverse to our manufacturing establishments in several sections of the Union. The great reduction of the currency, which the banks have been constrained to make in order to continue specie payments, and the vitiated character of it where such reductions have not been attempted, instead of placing within the reach of these establishments the pecuniary aid necessary to avail themselves of the

JAN. 27, 1837.]

Treasury Circular.

[SENATE.

ceptive, the illusive, the treacherous part, of this picture? and must not the other part, the sad and real sequel, inev

advantages resulting from the reduction in the prices of the raw materials and labor, have compelled the banks to withdraw from them a portion of the capital bereto-itably follow? Mr. B. said it must follow, and went over fore advanced to them. That aid which has been refused by the banks has not been obtained from other sources, owing to the loss of individual confidence, from the frequent failures which have recently occurred in some of our principal commercial cities."

And recommends encouragement to manufactures. Extract from President Monroe's annual message at the meeting of Congress, December, 1820.

several reasons to show it to be more certain now than in 1818-'19. In the first place, there were three times more banks now than then, and increasing much faster now than they did then, and dealing in millions now for hundreds of thousands then. In the next place, there is now a great political party, confederated with a powerful moneyed institution, to produce derangements of the currency, and pecuniary distress in the country, and to lay it upon the Government, when no such party existed in 1816, '17, 18. In the third place, the business of

cal form than formerly, by institutions using each other's other and a distant place, and entering into temporary notes as cash; issuing notes at one place payable at anand voluntary arrangements for keeping up the credit and circulation of their notes at places where payments which the present trade of banking is more dangerously of them are not exigible by law. These are points in exposed, and more critically situated, than it was twenty

"The receipts into the Treasury from every source (including a loan of three millions) to the 30th of Sep-banking is now carried on in a more complex and crititember last, amount to $16,794,107; whilst the public expenditures to the same period amount to $16,871,534. The sum of three millions, authorized to be raised by loan, by act of the last session of Congress, has been ob tained on terms advantageous to the Government. It is proper to add, that there is now due to the Treasury, for the sale of the public lands, $22,996,545. In bring ing this subject to view, I consider it my duty to submit to Congress whether it may not be advisable to extend to the purchasers of these lands, in consideration of the unfavorable change which has occurred since the sales, a reasonable indulgence. It is known that the purchases were made when the price of every article had risen to its greatest height, and that the instalments are becoming due at a period of great depression. It is presumed that some plan may be devised by the wisdom of Congress, compatible with the public interest, which would afford great relief to these purchasers."

What a change of language, (said Mr. B.) It looks Jike enchantment! and all to take place between the meeting of one session of Congress and the meeting of the next. What a change! No more forty-seven millions of income; no more surpluses; no more seventeen millions from public lands; no more propositions to raise their price; no more of all this glowing picture! But the income from customs fallen down to thirteen millions; the income from lands to less than one million; a Ioan of three millions authorized to carry on the Government; all the public expenditures cut down to the lowest point; universal distress; banks failing; currency deranged; prices depressed; manufactures sinking, and calling for a new tariff; relief to them recommended; the purchasers of the public lands twenty-three millions in debt to the Government, unable to pay, calling for relief, and relief recommended, and granted; the twenty-three millions of debt for lands either released, or payment deferred on extended credit; and the minimum price, instead of being raised to five dollars per acre, reduced to one dollar and twenty-five cents. Such was the change of picture which it was the fate of the same President to present in the short interval which elapsed between two sessions of Congress! and what is the instruction which we should derive from it? Certainly, that similar effects follow similar causes; and that the past should be a lesson and a warning for the future. We are now in the circumstances of 1816, '17, '18; overflowing Treasury, large surpluses, great sales of the public lands, the price of every thing high. And what made that state of things? Bank issues, bank expansions, bank loans, bank facilities! And what made the cruel reverse which took place in 1818-'19? Contraction of bank issues, contraction of expansions, curtailment of loans, withdrawal of facilities, and the explosion of innumerable banks! The paper system, the paper system was the real and sole cause of the illusive and deceptive prosperity which, for a while, smiled treacherously upon the country, and was so suddenly followed by a sad and real distress. And are we not at this moment, and from the same cause, realizing the first part, the deVOL. XIII.-39

years ago.

On the other hand, there are some safeguards now which did not exist then; first, the great amount of specie, now near eighty millions of dollars, which the wisdom of President Jackson's administration has accumulated in the country; secondly, the avoidance, thus far, of the error of former administrations in using local paper for a national currency; thirdly, the Treasury order of 11th July, 1836, which saved the Western banks last fall, and which it is the object of this bill to rescind and supersede. Two of these safeguards are in danger of being removed by law-the second and the third of them. The first will remove itself whenever the premium on foreign exchange rises to 10, (at which point it is profitable to export specie,) and that premium is now at near 10, and rising; and it will remove itself whenever the Federal Government, relapsing into the fatal error of receiving and paying out paper money, shall cease to create a home demand for the employment of gold and silver. The day of revulsion (said Mr. B.) may come sooner or later, and its effects may be more or less disastrous; but come it must, and disastrous, to some degree, it must be. The present bloat in the paper system cannot continue; the present depreciation of money, exemplified in the high price of every thing dependent upon the home market, cannot last. The revulsion will come, as surely as it did in 1819-20. But it will come with force if the Treasury order is maintained, and if paper money shall be excluded from the federal Treasury. But, let these things go as they may, and let reckless or mischievous banks do what they please, there is still a refuge for the wise and good; there is still an ark of safety for every honest bank and for every prudent man; it is in the mass of gold and silver now in the country-the seventy odd millions which the wisdom of President Jackson's administration has accumulated--and by getting their share of which, all who are so disposed can take care of themselves.

Sir, (said Mr. B.,) I have performed a duty to myself, not pleasant, but necessary. This bill is to be an era in our legislation and in our political history. It is to be a point upon which the future age will be thrown back, and from which future consequences will be traced. I separate myself from it; I wash my hands of it; I oppose it. I am one of those who promised gold, not paper. I promised the currency of the constitution, not the currency of corporations. I did not join in putting down the Bank of the United States, to put up a wilderness of local banks. I did not join in putting down the paper currency of a national bank, to put up a national paper currency of a thousand local banks.

Treasury Circular.

I did not strike Cæsar, to make Anthony master of Parliament to authorize the Bank of England to issue

Treasury Circular.

than the other, always drives its more respectable associ- great evil which Mr. B. pointed out as belonging to a ate out of its company.