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can require no explanation. A post note of the Philadelphia bank is better than a bill of exchange upon Philadelphia. If the exchange with New Orleans is in favor of Philadelphia, a merchant who wishes to make purchases at Orleans will find a post note of Philadelphia, or a power to draw upon it, among the best means of accomplishing his object. Bank notes, indeed, might answer the same purpose; but, as they are payable to bearer, the risk in their transmission is greater. In the instance referred to in the report, the bank had no possible interest in preferring the issue of post notes to bank notes, because the distance of the place to which the notes were to be sent, was an effectual security that bank notes would not have returned upon it within sixty days.


tween Marseilles and Paris, was often from 2 to 3 per cent. If, with all the facilities afforded by the internal improvements in which France is so rich-with a currency consisting almost exclusively of gold and silver, the variation in the value of money is three times greater in her territory than on our continent, can it be said that, in this respect, the bank has not fulfilled the ob jects of its institution? Before its establishment, the value of bank notes, even in the commercial States, had varied 20 per cent. from each other, and, as none of them bore a fixed proportion to the precious metals, or to any natural standard, it was impossible to assign any limit to their de preciation. You have required that the currency furnished by the National Bank should be everywhere convertible into silver, and it is so. You Mr. L. said that he had detained the Commit-have expected that it should be as uniform as tee very long on topics which he did not consider likely to affect the decision of any of the resolutions. But he had feared that, if the opinions of the select committee, on some of these points, had passed without objection, they would be considered as having received the sanction of the House.

He came now to the question which he supposed should chiefly engage the attention of the Committee: How far has the bank answered the great object of its institution? If, as a measure of policy, the dissolution of the charter would be unwise, Congress would not dissolve it, even though such a penalty were just, and such a proceeding legal.

The great object of Government in chartering the bank, was to provide a currency which should have that degree of stability and uniformity in its value, which is required by the interests both of our commerce and revenue. A currency equally valuable at every place and every time, cannot be provided by human wisdom. The nearest approach to this object has been generally supposed to be afforded by the employment of gold and silver as the measures of value. The 14th Congress did not aim at ideal perfection; they wished to combine with the conveniences of bank circulation an uniformity of value equal to that which was possessed by the precious metals; and the means which they employed to secure this uniformity were simple and effectual, by enjoining, under a heavy penalty, the pay ment of all its notes in coin, upon demand. In the report, indeed, the notes of the National Bank are said to be now "on the same footing with those of local banks." Of the footing on which local bank notes stood, he should speak hereafter; but the price current upon his table informed him that the greatest discount on branch notes of the United States, was of 1 per cent. This was a value much more uniform than that which coin could be expected to have in so extensive a country. He had been lately looking into a book on political economy, which had been published here, with high, and, in respect to its clearness and precision, with just commendations-the work of Mr. Tracy. He inferred from one of his chapters, that the difference of exchange be

coin, and it is more so. He would not detain the Committee by reading a paper which he had prepared with that intention, containing the state of exchange, since the establishment of the bank, with England, France, and Holland; for he found himself occupying much more of their time than he had expected. But he believed that any member who should turn his attention to the subject, would remark its steadiness during that period. He thought himself justified in drawing from this fact a conclusion highly favorable to the bank-that the whole amount of its discounts had generally been nearly right. The distribution of those discounts he had admitted to be wrong. It was the total amount of discounts which a spirit of eager and intemperate speculation would be most apt to enlarge. It was the total amount of discounts which a just regard to the stability of our money made it most important to restrain.

The correspondence of the bank with the western branches had been adverted to in the report of the committee. Mr. L. thought that it illustrated the general views which he had submitted of the subject. He read the 5th and 6th rules prescribed for the government of a western office, (documents, p. 29,) to show that the orders of the parent board were sufficiently energetic. The method of securing their execution by orders directly issued to their cashier, showed no want of decision. But the system which encouraged the board to extend its discounts by paying its bills in the Atlantic cities, and then aimed at reducing them by orders from the mother bank, was radically wrong.

To do justice to the conduct of the bank, and fairly to estimate its services in maintaining specie payments, it was proper to consider the peculiar difficulties of the time. He would not enter into the inquiry how far the payment of a large public debt must add, in every country, to the difficulties of banks of circulation; but, confining himself to the payment of about five millions of the Louisiana debt in one year, he would ask whether a remittance of this amount to foreign creditors must not press heavily upon the resources of a National Bank? Its arrangements, indeed, had been such as to relieve the country from much of the embarrassment which might

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have been anticipated-such as to illustrate very strikingly the advantage which a National Bank may produce in the management of exchanges. By becoming the agent for the remittance of the principal part of the debt, it has been able to conduct, without much inconvenience, an operation which might otherwise have produced a pressure upon the whole banking interest of the country. Among the difficulties of maintaining specie payments, the extraordinary extension of our trade to the East Indies could not be overlooked; and the demand for the precious metals in Europe, which resulted from the attempt by so many nations which, during their late wars, had used only paper, to recover specie circulation, was felt on this side of the Atlantic. Among the effects of paper money, that of its making the value of the metals more variable, even in countries which do not use it, must be obvious to the Committee. The employment of paper in any country causes its specie to be exported, and, adding to the supply of that article in foreign States, reduces its value there. The restoration of specie currency, by opening a new demand for the article from other countries, enhances its value there. Such is the process which is now going on in many parts of Europe. The diminution in the supply from the South American mines will be considered as exerting a less questionable influence on our stock of the precious metals. It was in opposition to all these difficulties-in defiance of the discontent which contracted discounts must have been expected to produce among its debtors, and a reduced dividend among its stockholders, that the Bank of the United States performed its great duty-that of maintaining specie payments throughout the whole extent of this country.

The safekeeping of the public deposites, which implies their prompt payment in specie upon demand, must appear particularly important to a Government whose losses have hitherto been so heavy as ours from the want of this provision. Even now, after the immense amount of paper which had been assumed by the National Bank, there remained, he believed, more than $500,000 of bank paper belonging to the Government, of which it had lost the use from the war to this time; of some of which he was very certain that it would lose even the principal.

The bank is admitted to have fulfilled the duty of transmitting the public money, without charge, wherever it might be required. He believed that the answer to the resolution of his friend from Virginia (directing an account of the money so transmitted) had not been received, and he was sure that, when received, it must be imperfect and unsatisfactory. The account must represent each office as receiving the amount lodged there, whether in its own bills or any other; and, in practice, a large proportion of the bills which are paid where exchange is most favorable, will be those of the States whose exchange is most unfavorable. For example, a large proportion of the revenue accruing in Boston will be paid in the notes of Ohio. That the transmission of money on account of the Government must be

H. OF R.

very considerable, even in time of peace, must be true, unless the expenditure of the country in each little district be supposed to be nearly equal to the revenue collected there. But the revenue and expenditure may be exactly equal-let us suppose that to be the case in Boston-and yet the bank may have to transmit for the Government the whole amount of such expenditurethat is, it may receive, upon the supposition which has been made, the money of Ohio, and pay to the Government Boston money. But, although the advantage was very considerable in peace, it was, by considering its effect in war, only that we could estimate its real magnitude. If the direct duties which the bank owes to the Government have been fulfilled, he would inquire how far the institution had furnished those accommodations to public debtors, which had probably been expected from it? These accommodations were of two kinds-by its loans, and by the general circulation of its paper.

There are two sentences in the report, which seem to intimate that the loans to public debtors, by the Bank of the United States, have been inadequate to their just expectations. The report represents the Northern offices as compelled "to deny to the debtors of the Government any indulgence or accommodation in their payments;" and in another page it states that "it does not appear that the notes of those who had revenue bonds to pay have at any time been discounted extensively." He considered this quite asa minor subject of attention; but he would state the evidence as it had appeared to his investigation.

In the very commencement of the operation of the bank, (on the 3d of January, 1817,) the board resolved that notes for those who had revenue bonds to pay should be discounted, and might be paid in the paper of other banks, while of the small amount of the notes discounted the whole were to be paid exclusively in specie. On the 9th of January a resolution authorized the offices to discount notes for revenue bonds, at a time when they had not commenced any other business. On the 4th April, 1817, when the board was obliged to limit its discounts everywhere, it directed a preference to be given to custom-house bonds. Thus we had proof that in the first business of the bank, a preference had been given to the notes of Government debtors, that the preference continued when circumstances required a general limitation of discounts; and if this was the case when the bank was straitened, it would be extraordinary indeed that it should be less liberal at other times. Nor did he know anything to countenance the opinion that it was so,

Perhaps we might infer something as to the disposition of the bank to extend its accommodations to the public from the order in which its first loans had been made. It was then that it must have been most penurious and reluctant in its discounts. Its first loan made before January, 1817, was one of $500,000 to the Government. Io Philadelphia it loaned in January, 1817, $182,642 to stockholders, and its next loans were $293,502 to those who were indebted on custom

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house bonds. Indeed he remembered no evidence to an amount exceeding five millions of dollars; of a discount being at any time refused on the they had received this amount in bank notes or notes of custom-house debtors. And Major But-in credits equivalent to notes, and for which notes ler's testimony, of which he had already spoken, might have been obtained; but they had them no had not been impugned by that of any other wit- longer. The complaint, then, was this: not that The Committee would recollect the state- the bank had not furnished a sufficient circulating ment, that he had never known any good paper medium to Kentucky and Ohio, but that it had refused on account of the amount of stock notes not retained it there. Could the bank have preoffered." vented its remittance to other States? The States to which its discounts had been largest, had chosen to employ them in the payment of former debts or the purchase of merchandise. He believed that there was a fund of justice in the people of this country, which would not allow them to consider the bank as responsible for the mischiefs which an improvident use of its discounts may have produced.

The Committee probably remembered a sentence in the letter from the Secretary of the Treasury, which he would read before he dismissed the subject. "The bank has promptly 'transmitted the public money wherever and ' whenever it has been required to perform that 'service. It is presumed that the facilities ex'pected from it in the collection of duties have 'been furnished, as no information has been re'ceived at this Department, stating that such fa'cilities have been withheld."

Such was the evidence "as to the indulgence or accommodation to the debtors of the Government" by the bank, or such it appeared to him to be, of evidence which might lead to a different conclusion, he knew none.

Of other advantages furnished to the Government by the bank, he would not speak; some of them were great, and he supposed undisputed. Of these, the bonus of a million and a half, was not the most considerable, and yet the representatives of the people might be expected to hesitate before they threw away even a million and a half. The obligation to transact all the business of the Loan office without charge, and the facilities which the bank must afford in all future loans, he considered as yet greater advantages.

We have seen how far the great duties of the bank have been fulfilled, and its expected advantages realized. But every question like that before the Committee, so far as it was a question of policy, not of justice or law, was in a great measure a comparative one. We had seen and knew what was the condition of the currency, and what the security for the operations of the Treasury with the Bank of the United States. What would be its condition without the bank, was a fair subject of inquiry and comparison; and a prudent man would consider even the doubt which must prevail as to the currency which would be established, as in itself a very strong objection to the destruction of the bank. What would our currency be? Would it be exclusivespecie? Would it be State bank notes or Government paper?

But the more important accommodation to public debtors, which was expected from the National Bank, consisted certainly rather in its supplying a currency which the Government engaged everywhere to receive, than in loans to which, under common circumstances, the State banks were quite adequate. How had this duty of supplying a national currency been performed? Of the inequality in the value of the National Bank notes, he had already spoken, and he hoped that he had satisfied the Committee that it had been less than had been expected at its institution. He had not heard the entire amount of notes thrown into circulation represented as deficient. Their distribution he had admitted to be bad, and had endeavored to explain the principal cause of its being so. But the loudest complaints against the bank on account of a deficiency of its notes were from the States in which the most disproportionate and excessively issues had been made. He read a paragraph from the report of a committee of the House of Rep-1 He did not think (although perhaps the highresentatives of Ohio, in which they characterize est authority on matters of this kind was in favor the proceedings of the bank in requiring that of the opinion) that the employment of paper payments should be made in its own notes, as rather than coin, was sufficiently recommended little better than insulting mockery." It might by its economy, as the substitution of a cheap inseem that, wherever bank notes which the Gov-strument of trade for an expensive one. If there ernment engaged to receive in taxes might be were no other inducement for the use of paper, issued, they would be carried to any part of the it would resemble the economy which should country in which they were necessary for the substitute wooden warehouses for stone ones. payment of public debts. The foreign merchan- Without entering into an inquiry into the advandise which is landed in New York or New Or-tages or defects of a specie circulation, he would leans is conveyed wherever there is a demand for it. And the credit or produce which enabled any section of the country to obtain foreign merchandise would be quite as effectual to procure bank notes or specie. But it was not necessary that Ohio, which perhaps complained most of the want of National Bank notes in its circulation, should have imported them from other States. In Kentucky and Ohio individuals had discounts

confess that his apprehensions would be much less than they were, if he could suppose that the metals would form the only currency of the country; that the Government could and would exact gold and silver in the payment of all its debts. But he would not waste the time of the Committee in speaking of an expectation, which every man who heard him, believed to be visionary.

In destroying the Bank of the United States,


Bank of the United States.

H. of R.

then, we must do it, because we prefer the currency which will be afforded either by the notes of local banks or by Government paper. It was not fair, indeed, to address this argument to gentlemen who believed that they were bound by the Constitution to destroy this institution. His friend from Virginia had properly abstained from the discussion of the Constitutional question, al-with a condition that each man should fight only though he seemed to expect it from the opposers of the resolution. Mr. L. would follow in this instance his example, not his advice.

that the resources of one State, its money as well as its men, might be employed for the defence of another? To authorize the General Government to levy a revenue from every part of the country, and to expend it only where is was levied, would be as wise a provision as that of empowering the President to call out the militia, upon his own farm. The Committee were aware that the money which the Government received in the Western States, was principally the proWhat were the inducements to prefer, in the duce of its sales of public land. It was the fund receipt of taxes, the notes of local banks? A which had been assigned to the Government, and gentleman from Virginia (Mr. PINDALL) bad sup- pledged for the payment of the public debt. This posed that without a National Bank, the State debt was due almost exclusively in the Atlantic institutions, in their own time and manner, would States and in Europe. Our creditors would not all have returned to specie payments; that the certainly receive Western paper. To say that Legislature of every separate State would at some it should be received by the Government, was to time or another have made them do so. Mr. L. | say that the fund should be diverted from the had no faith in this security, and he was sure great object for which it it had been established. that it would be vain to inquire for evidence of But, if the Government were willing to bear the it. What they would have done under circum- loss of a depreciated and unequal currency, it stances of great difficulty he would not say; but must neglect the plainest principle of the Conhe would show what one of them was doing or stitution in doing so-equality of taxation. The was likely to do now. He meant again to refer Committee must well remember that, before the to the report of a committee of the House of Rep- establishment of the National Bank, such was resentatives of Ohio; he did so with all proper the unequal value of money in the different deference, and without objection or complaint. States, that the merchants paid duties varying Nothing was more fair than that the State of fifteen per cent. from each other, on the same arOhio should receive in payment of its taxes and ticles. The merchant on one side of the Chesdebts whatever money it preferred; but when it apeake bay, was forced either to submit to heavy was argued that the United States might safe- loss or to enter his goods on the other side, where ly trust the regulation of their currency (the he did not expect them to be consumed. Thus framers of the Constitution, by the by, had not was a constant encouragement held out to deprethought so) to the regulation of the State Legis-ciation by the Government itself. The worse latures, it became necessary to inquire what was the currency with which those Legislatures would be satisfied. The report to which he had alluded, noticed, without disapprobation, the suspension of specie payments by the banks of the Was the issue of Government paper a measure State; reprobated the conduct of the National to which we ought willingly to resort? Mr. L. Bank in refusing to receive their bills in pay- would not indiscriminately reprobate all issues ments; and declared that they formed "a solid of this kind. Other nations, as well as our own, currency" "for all the purposes of internal com- had resorted to them, and the emergency had merce." No proposal could be expected, and he justified the act. He might acquiesce in paper believed none was made for a change in the solid money from necessity; he would not adopt it currency which was so satisfactory to the State. from choice. That the destruction of the bank But, did the interests or duty of the Government would be followed by the establishment of paper of the United States permit that this currency money, he firmly believed he might almost say should be received by it? Some dissatisfaction he knew. It was an extremity from which the was expressed, because the branch notes of the House would recoil, if it were now proposed; but United States Bank were at a discount of three-if the resolution upon the table were passed, quarters of one per cent. He read from a price would very soon be proposed. The subject was current the state of the market for bank notes; too large for an incidental discussion. Gentleby which it appeared that notes which were in- men thought that the amount of Government sisted to be in very good credit, varied from a paper might be limited, and depreciation prediscount of 24, to one of 7, 15, 25, and even 30 per vented by the rate of interest which should be cent. Was our revenue to be received in these exacted. Inadequate everywhere, the security notes? How were they to be employed? They was particularly ineffectual in the United States. might be expended in the district in which they Both the natural and legal rate of interest were were issued. But was the expenditure of every different in the different States. The State in district to be exactly limited to its revenue? which the actual rate of interest was highest, What became of the Union if it were so? He would borrow the largest amount of Government spoke of the thing, and not of the name. Our paper, in proportion to its business. From it, this Union might dissolve in imbecility, as well as be paper must flow upon the other States, and, adddestroyed by violence. Did not Union imply, ing to their quantity of an article for which there

the paper in which the Government debt was paid, the stronger the temptation to the business of importation in the place in which the duties were thus reduced.


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was no foreign use, its depreciation must be infallible. He had not time further to develop the argument, but he trusted it to the reflections of every man who would turn his attention to the subject.

Mr. L. would dismiss this topic with one more remark. The inequalities and inconveniences of bank paper would not be removed by Government paper. The local banks would discount on Government paper as they profess to discount on specie; and the proportion between the Government paper and the bank notes which would be considered as representing it, might be as unequal as it now is between those notes and specie.

Such were some of the permanent evils which the destruction of the bank might be expected to produce. Upon temporary evils and individual losses, although he could not look upon them with indifference, he would not enlarge. Let not gentlemen delude themselves with the hope that if the institution were destroyed, its affairs would be gradually wound up; that the convenience of the debtor, and not the interest of the stockholder, would determine the extent of the indulgence that should be granted to him. In the scarcity of money which would follow the destruction of the bank, property might be expected to fall 15 or 20 per cent.; or in other words, money to rise in the same proportion. In whatever proportion the capitalist who was turned out of the National Bank should choose to invest his money, to consent to a delay in its collection and investment, would be to add a new and certain loss to those with which he had been before afflicted. Indulgence would be given where it was necessary to secure the debt, not where it was necessary to save the debtor.

He confessed that he did not understand the views of those who were anxious that the branches of the United States Bank should be immediately withdrawn from Kentucky and Ohio. Was it meant that they should not continue to lend? If these States owed five or six millions to the bank, there was but one mode by which their justice would allow them to wish that such loans should be discontinued by their payment. But when could five millions be paid by them? He would answer for it, that the directors would be willing to reduce their discounts, and withdraw their funds from the Western States, much more quickly than it would be possible for their debtors to enable them to adopt that process.


conduct and real condition of the institutionthese gave us a command which, while it was fairly and moderately employed, could not be disregarded or resisted. Would it be wise to destroy a constitution because you disapproved of its first administration? Would you even break up a machine, because in its first experiment there had been some mismanagement? On this part of the subject, he had the rare advantage of supporting his opinions by those of the select committee. The committee say, that "to correct the many evils and mischiefs they have depicted," "the Secretary of the Treasury has full power to apply a prompt and adequate remedy whenever the situation of the bank shall require it." They had before observed, that "the root and source of all the instances of misconduct was the illegal, reprehensible division of the stock." “In the opinion of the committee, it is the greatest evil in all the system, and is the origin of all the others." "It requires a corrective." And the committee have proposed a bill which they consider as adequate to its correction. Can it be, when "the greatest evil and the origin of all the others," is one which it is not only so practicable but so easy to correct, that we shall destroy where we might cure?

He should say but a few words as to the present condition of the bank, and the character and safety of its debts. The views which could be taken of such a subject, must certainly be very general ones. He did not mean to speak of the safety of the holders of bank notes. That would be perfect, if half the debts of the institution were bad. But he did not believe that any of the errors imputed to the bank had impaired or endangered its capital. The notes secured by a pledge of stock had been most objected to. So far as the stock was pledged at par, it was evident that the security was perfect-if not in all cases for prompt, yet in all for the eventual payment of the notes. For information on the subject of those notes and their security, he referred to table 42, among the documents which had been published.

The whole value of the stock, as the security, estimated at par, exceeded the whole amount of the loans which it was pledged to secure by upwards of $1,898,000. But there were particular loans which exceeded the value of the stock pledged to secure them (if that stock were estimated at par) by $450,273. This, then, was the whole amount of stock loans which exposed the Mr. L. said that he deceived himself, if he had capital of the bank to any hazard. (The stocknot proved that the great objects proposed in the holder who owed the par value of his stock was establishment of the National Bank had been ful- equally debtor and creditor of the institutionfilled. But if he were wrong, if it had disap- the opposite quantities neutralized each other.) pointed the just expectations of the country, an It was to these $450,000, that the inquiry applied; enlightened legislature would inquire whether was the personal security given for that amount there were no remedy short of its destruction. sufficient? The report stated "that the provision The charter had given to the Government pow-requiring an endorser for the excess above the erful means for restraining the errors and con- par value, was in many instances effectually trolling the conduct of the bank. The appoint- 'evaded by some of the largest borrowers becomment of five directors, the withholding public de-ing endorsers for each other." How far the posites, the refusal to receive its notes in pay- endorsers were responsible men, he did not know. ment of taxes, an examination into the whole This mutual endorsement was one of the evils

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