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to pay them. This is certain, and to remedy this inconvenience, power is given to the directors, by the act, to suspend, at their own discretion, the payment of their notes, until the President of the United States shall otherwise order. The President will give no such order, because the necessities of government will compel it to draw on the bank till the bank becomes as necessitous as itself. Indeed, whatever orders may be given or withheld, it will be utterly impossible for the bank to pay its notes. No such thing is expected from it. The first note it issues will be dishonored on its return, and yet it will continue to pour out its paper, so long as government can apply it in any degree to its purposes.
"What sort of an institution, sir, is this? It looks less like a bank than a department of government. It will be properly the paper-money department. Its capital is government debts; the amount of its issues will depend on government necessities; government, in effect, absolves itself from its own debts to the bank, and by way of compensation absolves the bank from its own contracts with others. This is, indeed, a wonderful scheme of finance. The government is to grow rich, because it is to borrow without the obligation of repaying, and is to borrow of a bank which issues paper without liability to redeem it. If this bank, like other institutions which dull and plodding common sense has erected, were to pay its debts, it must have some limits to its issues of paper, and therefore there would be a point beyond which it could not make loans to government. This would fall short of the wishes of the contrivers of this system. They provide for an unlimited issue of paper, in an entire exemption from payment. They found their bank, in the first place, on the discredit of government, and then hope to enrich government out of the insolvency of their bank. With them, poverty itself is the main source of supply, and bankruptcy a mine of inexhaustible treasure." pp. 224-5.
The resolutions proposed by Mr. Webster, and supported in this speech, were not passed. Probably he did not expect them to pass, when he proposed them; but the same day, the main question was taken upon the passage of the bill itself; and, as it was rejected by the casting vote of the speaker, there can be no reasonable doubt, that without his exertions this portentous absurdity would not have been defeated. It is but justice, however, to the supporters of the measure, to say, that the mischievous consequences of its adoption, were by no means so apparent then as they are now. We have since had no little experience on the whole matter. It required all the power and influence of the general government, and of the present sound and specie-paying Bank of the United States, acting vigorously in concert for several years after the war, to relieve the country from the flood of depreciated notes of the state banks with which it was inundated, and to restore a safe and uniform currency. When or how this evil could have been remedied, if, at the very close of the war, it had been almost indefinitely increased by the establishment of a vast machine, issuing every day as much irredeemable paper as would be taken at any and every discount, and thus co-operating with the evil itself, instead of opposing it, is more than any man will now be bold enough to conjecture. We should, no doubt, have been in bondage to it to this hour, and probably left it as a yoke upon the necks of our children.
But, at the time referred to, the necessities of the government were urgent; and, on motion of Mr. Webster, the rule that prevented a reconsideration at the same session of a subject thus disposed of, was suspended the very next day, and a bill for a bank was, on the same day, January 3, recommitted to a select committee. On the 6th, the committee reported a specie-paying bank, with a much diminished capital, which was carried in the
house, with the fewest possible forms, on the 7th; Mr. Webster and most of his friends voting for it. It passed the senate, too, though with some difficulty; but was refused by the President, on the ground, that it was not sufficient to meet the exigencies of the case, which, indeed, we now know, no bank would have been able to meet. This project, however, being thus rejected, another was immediately introduced into the senate, the basis of which was to be laid, like that of the first bank proposed, in a paper currency. It passed that body; but on being brought into the house met a severe and determined opposition, which ceased only when, on the 17th, the news of peace being received, the bill was indefinitely postponed.
Mr. Webster's exertions, however, on the subject of the currency, did not cease with the overthrow of the paper bank system. He was re-elected by New-Hampshire for the fourteenth Congress, and sat there during the sessions of 1815-16; and 1816-17. The whole state of things in the nation was now changed. The war was over, and the great purpose of sound statesmanship was therefore to bring the healing and renovating influences of peace into the administration and finances of the country. On the introduction of the bill to incorporate the present Bank of the United States, Mr. Webster opposed its passage. The grounds on which he opposed it were mainly two. He thought the proposed capital, which, in the original bill, was fifty millions, was unwisely and unnecessarily large; and he thought the power given to the President to authorize a suspension of specie payments would prove ruinous. On both these points, his opposition, with that of his friends, was successful; the proposed amount of capital was reduced to thirty-five millions; and the power to authorize a suspension of specie payments was stricken out. It seems, also, to have been his opinion, that the government should have nothing to do with the appointment of Directors;-perhaps, because it had nothing to do with their appointment in the bank of 1791. As, however, the government itself was to be a large subscriber to the present institution, we confess, it seems to us but reasonable, that it should have its proper voice in the annual constitution of the Board of Directors. Perhaps Mr. Webster was opposed to the subscription to the stock on the part of the Government; and that this, together with the appointment of Government-Directors, and a hope of other useful changes in the charter, influenced his final vote, which was against the passage of the bill, though he had previously voted for one bank, and had steadily maintained the utility of a well established institution of that kind. His great object, however, through the whole, seems to have been to convince Congress and the country, that a paper bank would be ruinous; that a bank, with an inordinate amount of capital, such as fifty millions, would be dangerous; that a bank, with power to suspend specie payments, would bring the country to bankruptcy and ruin; and that all hope of restoring the currency of the country, even by means of the best conducted bank, would
be futile, unless the Government itself would execute the existing laws, and receive payment of its debts only in legal coin, or in the paper of specie-paying banks. In a speech, not printed in this volume, made on the 28th February, 1816, we find the following sound and cogent remarks, which we should have been glad to see republished with the rest of Mr. Webster's discussions on these subjects; for they are full of a wisdom which is always profitable.
"It was a mistaken idea," he said, "which he had heard uttered on this subject, that we were about to reform the national currency. No nation had a better currency than the United States-there was no nation which had guarded its currency with more care; for the framers of the constitution, and those who enacted the early statutes on this subject were hard-money men; they had felt, and therefore duly appreciated the evils of a paper medium; they therefore sedulously guarded the currency of the United States from debasement. The legal currency of the United States was gold and silver coin; this was a subject in regard to which Congress had run into no folly. What then was the present evil? Having a perfectly sound national currency, and the government having no power in fact to make any thing else current but gold and silver, there had grown up in different states a currency of paper issued by banks, setting out with the promise to pay gold and silver, which they had been wholly unable to redeem; the consequence was, that there was a mass of paper afloat, of perhaps fifty millions, which sustained no immediate relation to the legal currency of the country-a paper which will not enable any man to pay money he owes to his neighbor, or his debts to the government.-The banks had issued more money than they could redeem, and the evil was severely felt. He declined occupying the time of the house to prove that there was a depreciation of the paper in circulation; the legal standard of value was gold and silver; the relation of paper to it proved its state, and the rate of its depreciation. Gold and silver currency was the law of the land at home, and the law of the world abroad; there could, in the present state of the world, be no other currency. In consequence of the immense paper issues having banished specie from circulation, the government had been obliged, in direct violation of existing statutes, to receive the amount of their taxes in something which was not recognized by law as the money of the country, and which was, in fact, greatly depreciated. This was the evil.
"As to the conduct of the banks, he would not examine whether the great advances they had made to the government during the war, were right or wrong in them, or whether it was right or wrong in the government to accept them; but since the peace, their conduct had been wholly unjustifiable, as also had that of the Treasury in relation to them. It had been supposed the banks would have immediately sold out the stocks, with which they had no business, and have fulfilled their engagements; but public expectation had in this respect been disappointed. When this happened, the government ought, by the use of means in its power, to have compelled the banks to return to their specie payments. Any remedy now to be applied to this evil, must be applied to the depreciated mass of paper itself; it must be some measure which would give heat and life to this mortified mass of the body politic. The evil was not to be remedied by introducing a new paper circulation; there could be no such thing, he showed by a variety of illustration, as two media in circulation, the one credited, and the other discredited. All bank paper derives its credit solely from its relation to gold and silver; and there was no remedy for the state of depréciation of the paper currency but the resumptions of specie payments. If all the property of the United States was pledged for the redemption of these fifty millions of paper, it would not thereby be brought up to par; or, if it did, that would happen which had never yet happened in any other country. An issue of Treasury-notes would have no better effect than the establishment of a new bank paper. He illustrated this general position by referring to a period anterior to the time of the reformation of the coin of England, when the existing coin had been much debased by clipping, &c. which had created much alarm; an attempt had been made to correct the currency thus vitiated, by throwing a quantity of sound coin into circulation with the debased; the result was, that the sound coin disappeared, was hoarded up, because more valuable than that of the same nominal value which was in general circulation."
"In regard to the plan of this proposed bank, he would consent to no bank which
to all intents and purposes was not a specie bank; and in that view he was in favor of the proposed amendment. He expressed some alarm at the stock feature of the bank; which would enable and might induce the existing bank corporations to come forward and take up the whole stock of the National Bank. He should be glad to see a bank established, he observed, in the course of his remarks on this point, which would command the solid capital of the country. There were men of wealth and standing who would embark their funds in a bank constituted on commercial specie principles, but who would not associate in such an institution with the stockholders in the country, any more than a good currency would associate with a bad one. A National Bank ought to be regarded, not as the power to rectify the present state of the currency, but as a means to aid the government in the exercise of its power in this respect. The power of the government must be exercised in some way, and that speedily, or evils would result the extent of which he would not attempt to describe."
The suggestions which Mr. Webster made in this same speech, predicting enormous subscriptions to the proposed institution for purposes of speculation merely, and out of all proportion to the real ability of the subscribers, showed the sound statesmanlike forecast which has marked him through his whole political course, and were fully justified by the difficulties that occurred in consequence of them, in the early history of the bank. The bill, however, having passed, and having received the President's signature on the 10th April, Mr. Webster, who saw, indeed, at once, that it placed the bank substantially on the principles maintained in his resolutions of the preceding year, which defeated the project of a paper bank, saw no less quickly and clearly, that the peace had produced an important change in the influence of the paper currency of the country, and that no National Bank, however wisely managed, would alone be able to meet the increased and increasing evils of the case, or have power enough to restore unaided a sound and safe circulating medium. The small depreciated notes of the state banks south of New-England, he saw, still filled the land with their lothed intrusion; and, what was worse, the reyenue of the general government, receivable at the different custom-houses, was collected in this degraded paper, to the great injury of the finances of the country, and to the still greater injury of the property of private individuals, who, in different states, paid, of course, different rates of duties to the treasury, according to the value of the paper medium in which it happened to be received. Mr. Webster foresaw the mischiefs that must follow from this state of things, if a remedy were not speedily applied. He, therefore, in the same month of April, 1816, introduced a resolution, the effect of which was, to require the revenue of the United States to be collected and received only in the legal currency of the United States, or in bills equal to that currency in value.
In stating the nature of the evil, after showing by what means the paper of the state banks south of New-England had become depreciated; he says,
"What still farther increases the evil is, that this bank paper being the issue of very many institutions, situated in different parts of the country, and possessing dif ferent degrees of credit, the depreciation has not been, and is not now, uniform throughout the United States. It is not the same at Baltimore as at Philadelphia, nor the same at Philadelphia as at New-York. In New-England, the banks have
not stopped payment in specie, and of course their paper has not been depressed at all. But the notes of banks which have ceased to pay specie, have nevertheless been, and still are, received for duties and taxes in the places where such banks exist. The consequence of all this is, that the people of the United States pay their duties and taxes in currencies of different values, in different places. In other words, taxes and duties are higher in some places than they are in others, by as much as the value of gold and silver is greater than the value of the several descriptions of bank paper which are received by government. This difference in relation to the paper of the District where we now are, is twenty-five per cent. Taxes and duties, therefore, collected in Massachusetts, are one quarter higher than the taxes and duties which are collected, by virtue of the same laws, in the District of Columbia." pp. 233-4.
A little further on, after showing that if this state of things is not changed by the government, it will be likely to change the government itself, he adds,
"It is our business to foresee this danger, and to avoid it. There are some political evils which are seen as soon as they are dangerous, and which alarm at once as well the people as the government. Wars and invasions therefore are not always the most certain destroyers of national prosperity. They come in no questionable shape. They announce their own approach, and the general security is preserved by the general alarm. Not so with the evils of a debased coin, a depreciated paper currency, or a depressed and falling public credit. Not so with the plausible and insidious mischiefs of a paper-money system. These insinuate themselves in the shape of facilities, accommodation, and relief. They hold out the most fallacious hope of an easy payment of debts, and a lighter burden of taxation. It is easy for a portion of the people to imagine that government may properly continue to receive depreciated paper, because they have received it, and because it is more convenient to obtain it than to obtain other paper, or specie. But on these subjects it is, that government ought to exercise its own peculiar wisdom and caution. It is supposed to possess, on subjects of this nature, somewhat more of foresight than has fallen to the lot of individuals. It is bound to foresee the evil before every man feels it, and to take all necessary measures to guard against it, although they may be measures attended with some difficulty and not without temporary inconvenience. In my humble judgment, the evil demands the immediate attention of Congress. It is not certain, and in my opinion not probable that it will ever cure itself. It is more likely to grow by indulgence, while the remedy which must in the end be applied, will become less efficacious by delay.
"The only power which the general government possesses of restraining the issues of the state banks, is to refuse their notes in the receipts of the treasury. This power it can exercise now, or at least it can provide now for exercising in reasonable time, because the currency of some part of the country is yet sound, and the evil is not universal. If it should become universal, who, that hesitates now, will then propose any adequate means of relief? If a measure, like the bill of yesterday, or the resolution of to-day, can hardly pass here now, what hope is there that any efficient measures will be adopted hereafter ?" pp. 235-6.
The doctrine of this speech is as important as it is true. A sound and uniform currency is essential, not only for the convenient and safe management of the fiscal concerns of a government; but, no less so, for the security of private property. It is, indeed, at once the standard and basis of all transfer and exchange; and, whenever the circulating medium has become much deranged in any country, it has been found an arduous, and sometimes a dangerous task, to restore it to a sound state. The effort almost necessarily brings on a conflict between the two great classes of debtor and creditor, into which every community is divided, the creditor claiming the highest standard of value in the currency, and the debtor the lowest; and the results of such a conflict have not unfrequently been found in changes, conyulsions, and political revolution. From such a conflict we