posing in the payment of bills exceeded 1 per cent. of their amount, or $40,000 daily. Were we now on a similar basis, it is not probable that a larger proportional amount of metallic money would be required. That a much larger amount interposes is due to the vicious monetary system which prevails. Under the two banks the loans made were almost all time-loans. The aggregate amount of issues of banks and bankers at the present time equals about $3,200,000,000. The exchanges at the Clearing House, showing the amount daily maturing at the great centres of trade, average about $200,000,000 daily, the whole amount of loans and discounts at any one time outstanding running off within a period of, say, sixteen days. The exchanges at the Clearing Houses make up the greater part of those of the country. The balances daily arising at these average about 8 per cent., or $16,000,000. Were no loans made but upon bills of exchange, it is not probable that the balances daily arising would exceed one-quarter their present amount, or $4,000,000. Banks now exercise two functions they are lenders of capital as well as discounters of bills. The two are wholly different in kind, and should never be exercised by the same institution unless it be composed of two independent departments. A lender of capital parts with it. The capital of an issuer of currency is always to remain in hand. To part with it is to weaken his power of issue and contract the volume of currency in an equal degree. Loans of capital at bank are ordinarily demand loans liable to be called in at any moment, often requiring large sums of coin in their payment, in want of other provision. Another reason for the very large balances now daily arising at the Clearing Houses is that a greater part of the currency, that of the Government, does not represent merchandise in process of distribution, and is not discharged by its use. It is neither capital, nor the symbol of capital. Its effect, consequently, is to excite speculative operations in which large balances necessarily arise. With the retirement of such currency, and with proper restrictions upon the issues by banks, the amount daily interposing would not exceed the amount named, a much larger sum to be provided to meet demands other than those arising in the ordinary operations of commerce and trade.

The system created by Hamilton was an ideal one, as by it no issues could be made, either by the National or State Banks, except for the distribution of merchandise, there being no difference between them and the bills of exchange out of which they arose, except that the former, to serve as money, were payable presently; the latter being drawn for the time necessary, in theory at least, for the movement of merchandise from producers to distributers for consumption; the purpose and effect of both kinds of instruments being to discharge capital from the processes of distribution, both being retired by their use, the value of each depending upon that of its constituents, merchandise, and the reserves of the issuers. So long as the issues, whether of the National or State Banks, were symbolic there could be no inflation of the currency, as the amount measured the value of the subjects of consumption. As from their representative capacity they were to their holders the equivalent of specie, they were preferred to it as money, from the greater safety and convenience of their use. There could be no run upon the issuers for coin, as no considerable balances to be paid in it could arise either in foreign or domestic trade. Such balances arise in domestic trade only when "accommodation paper," as it is termed, is discounted; and in foreign trade only when imports exceed exports of merchandise, in which case gold goes forward as the universal equivalent for their discharge.

Although the act establishing the bank provided that, during its existence, there should be no other of the kind, no monopoly of issue was or could be created, as the State Banks which already existed, with the great number of new ones which speedily followed, were capable of supplying, and did supply, by far the greater part of the currency, precisely the same in kind as that issued by the National one to which the public would naturally give preference, unless the issues of the former were equally well based. The State Banks, consequently, without any provision in their charters therefor, were forced to observe the restrictions imposed upon the National one; the manner in which they were enforced having been already sufficiently described. The National Bank received the notes and credits of the State Banks, not only in the ordinary course of business, but in the payment of the public revenues. As it was responsible for these to the Government, at the value of coin, it compelled all other issuers to make good daily in coin all balances

arising against them. The notes and credits of the State Banks, over which the National Government had no other control but that described, could, consequently, no more inflate the currency, could no more be in excess than those of the National Bank, all being alike the same in kind. For the further protection of the public the national institution was restricted to a rate of interest not exceeding six per cent., a rate never regarded as excessive, being less than that prescribed by many of the States to their own institutions. From the abundance of capital it was seldom that such rate could be obtained. That prescribed to the National could not be exceeded by the State Banks, as the former, like the Bank of England, held itself, with its branches established at every considerable place of trade, bound to discount all good bills that were offered. By the means described a perfect currency, the greater part of it supplied by the State Banks, was provided alike for the Government and people, specie, except in the form of subsidiary coins, being wholly discharged from ordinary use. As the bank was the custodian of the public revenues the Government was relieved of all charge of their keeping, transfer and distribution. If metallic money was wanted, either by the people or the Government, it was supplied by the bank, remittances abroad being made by its bills as the great drawer of "foreign exchange."

OVERTHROW OF THE BANK AND THE INFLATION OF THE CURRENCY.

In 1832 a bill passed both Houses of Congress for the extension of the charter, to expire in 1836, of the bank. The bill was vetoed by General Jackson. Among the reasons therefor, set forth in a message of great length, were the following:

To the extent of its practical effect, the bank is a bond of union among the banking establishments of the nation, erecting them into an interest separate from that of the people, and its necessary tendency is to unite the Bank of the United States and the State banks in any measure which may be thought conducive to their common interest.

By documents submitted to Congress at the present session, it appears that on the first of January, 1832, of the $28,000,000 of private stock in the corporation, $8,405,500 were held by foreigners, mostly of Great Britain. The amount of stock held in the nine Western and Southwestern States is $140,200, and in the four Southern States is $5,623, 100, and in the Middle and Eastern States is about $13,522,000. The profits of the bank in 1831, as shown in a statement to Congress, were about $3,455,598; of this there accrued in the nine Western

States about $1,640,048; in the four Southern States, about $352,507; and in the Middle and Eastern States, about $1,463,041. As little stock is held in the West, it is obvious that the debt of the people in that section to the bank is principally a debt of the Eastern and foreign stockholders; that the interest they pay upon it is carried into the Eastern States and into Europe; and that it is a burden upon their industry and a drain of their currency, which no country can bear without inconvenience and occasional distress. To meet this burden and equalize the exchange operations of the bank, the amount of specie drawn from those States through its branches, within the last two years, as shown by its official reports, was about $6,000,000. More than half a million of this amount does not stop in the Eastern States, but passes on to Europe, to pay the dividends of the foreign stockholders. In the principle of taxation recognized by this act, the Western States find no adequate compensation for this perpetual burden on their industry and drain of their currency. The branch bank at Mobile made, last year, $95,140; yet, under the provisions of this act, the State of Alabama can raise no revenue from these profitable operations, because not a share of the stock is held by any of her citizens. Mississippi and Missouri are in the same condition, in relation to the branches at Natchez and St. Louis; and such, in a greater or less degree, is the condition of every Western State. The tendency of the plan of taxation which this act proposes will be to place the whole United States in the same relation to foreign countries which the Western States now bear to the Eastern. When, by a tax on resident stockholders, the stock for this bank is made worth ten or fifteen per cent. more to foreigners than to residents, most of it will inevitably leave the country.

In another of its bearings, this provision is fraught with danger. Of the twenty-five directors of this bank, five are chosen by the government and twenty by the citizen stockholders. From all voice in these elections the foreign stockholders are excluded by the charter. In proportion, therefore, as the stock is transferred to foreign holders, the extent of suffrage in the choice of directors is curtailed.

Already is almost a third of the stock in foreign hands, and not represented in elections. It is constantly passing out of the country, and this act will accelerate its departure. The entire control of the institution would necessarily fall into the hands of a few citizen stockholders; and the ease with which the object would be accomplished, would be a temptation to designing men to secure that control in their own hands, by monopolizing the remaining stock. There is danger that a president and directors would then be able to elect themselves from year to year, and, without responsibility or control, manage the whole concerns of the bank during the existence of its charter. It is easy to conceive that great evils to our country and its institutions might flow from such a concentration of power in the hands of a few men irresponsible to the people.

Is there no danger to our liberty and independence in a bank that in its nature has so little to bind it to our country?

Should the stock of the bank principally pass into the hands of the subjects of a foreign country, and we should unfortunately become involved in a war with that country, what would be our condition? Of the course which would be pursued by a bank almost wholly owned by the subjects of a foreign power, and

managed by those whose interests, if not affections, would run in the same direction, there can be no doubt. All its operations within would be in aid of the hostile fleets and armies without. Controlling our currency, receiving our public moneys, and holding thousands of our citizens in dependence, it would be more formidable and dangerous than the naval and military power of the enemy. It is maintained by the advocates of the bank that its constitutionality, in all its features, ought to be considered as settled by precedent, and by the decision of the Supreme Court. To this conclusion I cannot assent. Mere precedent is a dangerous source of authority, and should not be regarded as deciding questions of constitutional power, except where the acquiescence of the people and the States can be considered as well settled.

If the opinion of the Supreme Court covered the whole ground of this act, it ought not to control the coördinate authorities of this government. The Congress, the executive, and the court must each for itself be guided by its own opinion of the Constitution. Each public officer who takes an oath to support the Constitution swears that he will support it as he understands it, and not as it is understood by others. It is as much the duty of the House of Representatives, of the Senate, and of the President to decide upon the constitutionality of any bill or resolution which may be presented to them for passage or approval, as it is of the supreme judges when it may be brought before them for judicial decision. The opinion of the judges has no more authority over Congress than the opinion of Congress has over the judges; and, on that point, the President is independent of both. The authority of the Supreme Court must not, therefore, be permitted to control the Congress or the executive when acting in their legislative capacities, but to have only such influence as the force of their reasoning may de

serve.

This act authorizes and encourages transfers of its stock to foreigners, and grants them an exemption from all State and national taxation. So far from being "necessary and proper" that the bank should possess this power to make it a safe and efficient agent of the government in its fiscal operations, it is calculated to convert the Bank of the United States into a foreign bank; to impoverish our people in time of peace; to disseminate a foreign influence through every section of the republic; and, in war, to endanger our independence.

General Jackson in his veto message proceeded upon the assumption that the issues of the bank were mere forms of credit, costing nothing in themselves, but for the use of which interest was charged. If its loans equalled $50,000,000, at five per cent., the profit was $2,500,000, less the trifling expense involved. A privilege so valuable, if not originally obtained by corruption, was to be maintained by corruption. As an illustration of its oppressions, "hardly a dollar of the share capital of the bank," he said, "was held in the Southern and Western States; yet from the former the bank in 1831 drew $1,640,048; from the latter, $352,507," all pure plunder. In 1830 and 1831, specie, to the amount of $6,000,000,