us from competing in our own markets with foreign manufacturers, has produced extravagant importations, and has counteracted the effect of the large incidental protection afforded to our domestic manufactures by the present revenue tariff.

In the meantime, it is the duty of the Government, by all proper means within its power, to aid in alleviating the sufferings of the people occasioned by the suspension of the banks, and to provide against a recurrence of the same calamity. Unfortunately, in either aspect of the case, it can do but little. Long experience has deeply convinced me that a strict construction of the powers granted Congress is the only true, as well as only safe, theory of the Constitution.

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Here is a graphic picture of the condition of the country from the advent, with Jackson, of the Democracy, to its overthrow in 1860. It was the picture of a people wholly incapable of applying the most obvious remedy to the greatest of evils a disordered currency. "In the midst of unsurpassed plenty in all the productions of agriculture and all the elements of national wealth, we find," said Mr. Buchannan, "our manufactures suspended, our public works retarded, our private enterprises abandoned, thousands of useful laborers thrown out of employment and reduced to want; the revenues of the Government greatly reduced, to be made good only by a loan before the close of the present session; such loan being only a slight misfortune compared with the suffering and distress prevailing among the people. With this distress the Government cannot fail to sympathize, though it may not be in its power to afford relief."

Why, in the midst of boundless elements of wealth and in a period of profound peace, was it possible that such a terrible picture could be drawn? For the reason that "the currency was left to the discretion of 1,400 banking institutions. The framers of the Constitutions are not responsible for the anomaly that a Government, endowed with sovereign attributes for coining money and regulating the value thereof, should have no power to prevent others from driving this money out of the channels of circulation with paper that does not represent gold and silver." Of course not. They addressed themselves, like men of sense, not as the servile tools of an exacting and relentless slave-holding oligarchy, to a practical matter, to be determined upon its own merits, not upon abstract considerations of government. From their experience of the past, one of the first measures of the "framers of the Constitution," who dominated wholly the first Congress, was the provision of a system under which, no matter the amount, paper money, whether issued by State or National Banks, could not only have no tendency to

drive silver and gold out of the country, but, on the contrary, had a direct tendency to attract them from other countries to supply the reserves of the issuers of paper money to be increased in ratio to the increased transactions and prosperity of our people. Had a picture been drawn of the condition of our country for twenty years following the foundation of our Government it would have been one of unsurpassed prosperity and contentment, the people turning to the best account their boundless resources; the chief instruments therefor being a currency which, under the supervision of the Government, not only discharged coin from the exchanges, but which was always at the value of coin. For the brief period between the two banks the picture drawn by Mr. Buchanan would have been true to the letter, the currency being wholly committed to a vast number of banks over which the Government had no control. Of the condition of the country following the creation of the second bank, after the situation was restored, the picture, drawn by Gallatin, and by Committees of both Houses of Congress, one of universal contentment and prosperity, has been given. The moment that the National Government discharged itself of one of the most important duties of sovereignty the supervision of the currency all was changed. "Congress was clothed," said Mr. Buchanan, "with the attribute of coining money and regulating the value thereof;" but it was a power which could be defeated by issuers of currency responsible only to themselves. An attribute that cannot be enforced is not sovereign. In the matter of the currency the banks alone were clothed with sovereign power.

Under the rule of Mr. Buchanan, not only was Government discharged of all power over the currency, by which the purpose of the attribute of "coining money and regulating the value thereof " was wholly defeated, but it was discharged of every attribute necessary to its own existence. From the nomination of Jackson for a second term, by the adoption, always repeated, by the nominating conventions of the "Two-thirds rule," no Democrat could hope to reach the presidency unless he personally pledged himself to oppose no obstacle to the withdrawal of any State from the "Confederacy," the term applied by the States' rights party to the National Government. General Jackson declared that the meaning of the Constitution was a matter for every one one living under it. By the National Conventions which followed his doctrines were definitely formulated.

The result was that, at the close of Mr. Buchanan's administration, the National Government existed by sufferance alone. To attacks from within it could oppose no resistance whatever. All life, or purpose, or power of self-defence was at an end. When near its close the Southern States were seceding in a body, he declared that, while they had no right to go, no force could be opposed to their going. It will be always so with a party that draws its inspiration from the lowest elements of which it is composed. The Democracy, under General Jackson, came into possession of a vast and goodly estate, which was wholly wasted at the end of thirty years. But for the new life that came with the great uprising of the North, our boasted Republic would have come to an end. From the experience of the past no wonder the terror that seized the nation when it seemed possible that at the recent election, the Democracy, in which for the moment were combined all the revolutionary elements of the country, might again carry the day.

If it be objected that politics have no place in a treatise on money, it may be replied that the construction of the Constitution under General Jackson turned wholly upon the question whether the Government of the United States was competent to exercise supervision over the money of the country in ordinary use. He denied that it possessed such power in the face of its exercise for forty years by the establishment of two banks, sustained by the authority of Jefferson and Madison, and of the Supreme Court of the United States, the tribunal created by the Constitution to determine the validity of all matters in law and equity arising under it. It was the turning point in the history of the country, leading directly to the secession of the Southern States and the war of the Rebellion. For nearly seventy years the currency has been the great political question of the country, and never more so than at the present moment. There have since the war of Independence been but two great subjects of history in the United States — the Currency and the war of the Rebellion. The former is by far the most important, as it shows how the war arose, the events of the latter being of little consequence except in their bearing upon the restoration of the surpremacy of the National Government in its relation to that of the States. To regain the ground occupied by the Fathers we must learn how we have wandered so far, and

restore the system they established by showing how foully it was overthrown.

UNITED STATES NOTES.

No sooner was it seen that the war of the Rebellion was to be a life and death struggle between the two sections of the country than the chief care of the Government, now for the first time for thirty years wholly in the hands of the North, was provision of the means for its prosecution. For this purpose Mr. S. P. Chase, Secretary of the Treasury, on the 9th of August, 1861, met in conference a large number of citizens of New York, at the house of the Assistant Treasurer, J. J. Cisco, in that city. Of that meeting and the results that followed, Mr. George S. Coe, then President of the American Exchange Bank in New York, gave the following account :

After the disastrous battle of Bull Run, and when Washington was closely beleaguered, and the avenue thence to New York through Baltimore was intercepted by the enemy, Mr. Chase, then Secretary of the Treasury, came to this city via Annapolis, and immediately invited all persons in this community who were supposed to possess or control capital to meet him on the evening of August 9th, at the house of John J. Cisco, Esq., then Assistant Treasurer of the United States in New York. This invitation drew together a large number of gentlemen of various occupations and circumstances. During the discussion which ensued I suggested the practicability of uniting the Banks of the North by some organization that would combine them into an efficient and inseparable body, for the purpose of advancing the capital of the country upon government bonds in large amounts; and, through their clearing-house facilities and other well-known expedients, to distribute them in smaller sums among the people in a manner that would secure active co-operation among the members in this special work, while in all other respects each Bank could pursue its independent business. This suggestion met the hearty approbation of the assembled company, and arrested the earnest attention of the Secretary. At his request, it was presented to the consideration of the Banks, at a meeting called for that purpose at the American Exchange Bank on the following day; and was so far entertained as to secure the appointment of a Committee of ten bank officers, to give it form and coherence. The Committee convened at the Bank of Commerce, whose officers zealously united in the effort, and a plan was reported unanimously. Their report was cordially accepted and adopted by the Banks in New York; those in Boston and Philadelphia being represented at the meeting, and as zealously and cordially united in the organization.

It was at once unanimously agreed that the Associated Banks of the three cities would take fifty millions of 7-3 notes at par, with the privilege of an additional fifty millions in sixty days, and a further amount of fifty millions in sixty days more, making one hundred and fifty millions in all, and offer them for sale

to the people of the country at the same price, without charge. In this great undertaking, the Banks of New York assumed more than their relative proportion. To insure full co-operation and success, the expedient of issuing clearing-house certificates, and of appropriating and averaging all the coin in the various Banks as a common fund, which had been invented but the year before, was applied to this special object with good effect.

The capitals of the Banks thus associated made an aggregate of one hundred and twenty millions, -an amount greater than the Bank of England and the Bank of France combined, each of which institutions had been found sufficient for the gigantic struggles of those great nations, from time to time, in conflict with all Europe.

The following figures also show that the financial condition of the Banks at the time was one of great strength:

coin on hand, equal to 45 per cent. of all liabilities. Surely, such conditions as these, with judicious administration, were adequate to the work which the country required. A great merit of this bank combination at that critical moment, when the life of the nation hung in the balance, consisted in the fact that it fully committed the hitherto hesitating moneyed capital of the North and East to the support of the government. The bank officers and directors who thus counselled and consented were deeply sensible of the momentous responsibility which they assumed; but all doubt and hesitation were instantly removed, and perfect unanimity was secured by the question, "What if we do not unite?" And acting as guardians of a great trust exposed to imminent danger, they fearlessly elected the alternative best calculated to protect it.

The problem to be practically resolved by the Banks was this: How can the available capital be best drawn from the people, and devoted to the support of government, with the least disturbance to the country? and by what means can arms, clothing, and subsistence for the army be best secured in exchange for government credit? These were simple questions of domestic exchange, and most naturally suggested the use of the ordinary methods of bank-checks, deposits, and transfers, that the experience of all civilized nations had found most efficient for the purpose; and that this should be accomplished by the Associated Banks, in a manner best calculated to prolong their useful agency and to preserve the specie standard, it was indispensable that their coin reserves remain with the least possible change. Accordingly, it was at once proposed to the Secretary that he should suspend the operations of the Sub-Treasury Act in respect to these transactions, and, following the course of commercial business, that he should draw checks upon some one Bank in each city representing the Association, in small