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Dec. 22, 1836. ]

Treasury Circular.


early apprized of what is to be the policy of the majori- should convene, which might adopt such further legislaly, and of the coming administration, on those important tion in regard to the sales of the lands as the public insubjects. He had heard the remark with some surprise, terests may require? not thinking it called for or justified by the occasion. Sir, (said Mr. N.,) there is another reason why I canWithout stopping to inquire what are the opinions of the not vote for the resolution before the Senate. A new Senator from Missouri, or what they are considered to rule has been adopted in regard to the sale of the public be by the gentleman from Massachusetts, he must be lands, that has been in operation for a time, and which permitted to say that no such conclusions could justly has a tendency to check speculation. I would not repeal follow the decision of the question before the Senate. that rule, and open again the floodgates of speculation;

There were reasons, he thought weighty reasons, certainly not until I know whether Congress will pass which would justify Senators in voting against this reso any act regulating the sale of the public lands. It is, I Jution, without committing themselves in any sense, or think, the duty of Congress to do this; the interest of in any degree, in regard to the great questions of cur. the country requires it; public sentiment demands it; rency and revenue, to which the Senator had referred. and it is sirongly recommended by the President. If Without reference to what might be his opinion as to Congress suffer the session to pass off, without attempt. the true policy of the Government in the collection of ing to regulate the sale of the public lands so as to check the revenue, whether from the public lands or the cus speculation, they will neglect their duty to the country. toms, he was prepared to vote against this resolution. | Believing that there will be additional legislation on the To pass this resolution, would be to censure and con subject, which may supersede the Treasury order, he demn an act of the Executive as being wrong, ab initio, was not at this time prepared to disturb it. Changes in or at the time of its adoption. Wheiher the rule pre- any extensive business are always attended with some scribed in the Treasury order be a wise and just one, inconvenience, and should be avoided as much as possifor the settled action of the Government, is a question ble. When it shall be settled that Congress will not entirely distinct from that, whether it may have been ex alter the system, it may become necessary to decide pedient and proper at the time it was adopted. He was whether the rule prescribed in the order shall be mainsatisfied ihat ihe Treasury order could be justified, view- tained, or the old practice restored; and if we do any ed as a temporary measure only, intended to remedy thing on this subject, our action should be more compreevils of great magnitude, arising from the extraordinary hensive; it should embrace the whole subject, and be circumstances connected with the sales of the public settled by law what currency shall be received for the la ds; and he was not sure that this was not the true payment of the revenues, not only from the lands, but liglit in which it ought to be considered. It was the from customs and all other dues. The doubt and un. duty of the Executive to watch over the public revenue, certainty which hangs over this subject ought to be re. and see that it was secure. Was there no hazard from moved. the extensive and gambling speculations in the public For these reasons, therefore, he should vote against lands paid for only in bank bills, which were handed rescinding the Treasury order, even if he was satisfied over by the receivers to the deposite banks and placed that the rule it prescribes was not one which it would be to the credit of the United States? A large portion of expedient and just to establish as a settled policy. the purchases were paid for in bills of the deposite banks, In this view of the subject, he had thrown out of the which, after going into the hands of the receivers, were case the legal objection which has been raised against returned and loaned out again, to go through the same the Treasury order. operation. This was virtually reviving the old credit Mr. President, there are two general grounds of obsystem, as the United States received nothing but credit jection that have been urged against the order which for the lands. If there was no hazard to the revenue the resolution on your table proposes to rescind, which from these practices, and from the magnitude and ex I will proceed to consider. The first objection is, that tent of the sales made upon this kind of credit, then gen. it is illegal; the second, that its operation is partial, untlemen over the way had altered their opinions very just, and injurious to the country, and has been the much within the last six months. During the last session principal cause of the embarra:sments and pressure for of Congress, we were repeatedly, and almost daily, told money which have been so extensively experienced. by those who now oppose the Treasury order, that the It has also been claimed by the Senator from Ohio, funds of the Government in the Western deposite banks (Mr. Ewing,] that the order is unconstitutional, that it were insecure, and that nothing but credit was received conflicts with that provision of the constitution which for the public lands. Can gentlemen have forgotten declares that “the citizens of each State shall be entitled their often-repeated declarations on this subject? If so, to all the rights and immunities of the citizens of the they must be blessed with short memories. Again and several Stales.” This, however, is a very small point, again did Senators refer to the small amount of specie in so small that the Senator seemed to find it difficult to those banks, and an impression was attempted to be stand upon it; it was quite loo small for bim to waste the made, lhat their specie funds were the only solid securi time of the Senate abou', and he should therefore pass ty for the large sums due the United States.

it over. The order was calculated to correct, and, to a con Is the Treasury order contrary to law? If it is, it ouglic siderable extent, no doubt, has corrected, this evil. It to be rescinded, without regard to other considerations. insured something valuable for the lands, and that some. Congress is empowered to lay taxes, and to authorize thing valuable was transferred to the deposite banks, and regulate the sale of the public lands; and, in doing and formed a more solid basis for the Government this, it can no doubt direct the kind of money or currencredits.

cy which shall be received in payment. But if it neg. The order was also calculated to check speculation in lect to do this, it becomes the duty of the Executive, the public lands, which, in itself, was an evil of no small who is charged with executing the law, to receive pay. magnitude, transferring the best part of the national do ment for taxes and lands in the legal currency of the main into the hands of heartless speculators, to the great United States. What that legal currency is, there can be injury of actual settlers, and the detriment of the whole no dispute, so that the only question which can arise is, country: Public opinion was rising up against it, and whether there is any law which autborizes the payment required that something should be done to arrest an evil of the revenue and debts due the United States, in any of so extensive and serious a nature. What other or other currency, or in any other way. It is claimed that better measure could have been adopted, until Congress the joint resolution of 1816 requires the Secretary of


Treasury Circular.

- [Dec. 22, 1836.

the Treasury to collect the taxes and debts due the Uni- debtors of the Government, it was designed to restrict ted States in a currency different from the legal corren. them, and did restrict them. What was the condition cy of the country. That resolution provides “that the of your Treasury at that period, and how was the revenue Secretary of the Treasury be required and directed to collected? There was ihen in the Treasury more than adopt sich measures as he may deem necessary, to cause, one million of dollars in the bills of broken banks; and as soon as may be, all duties, taxes, debts, or sums of the public revenue had been collected in the notes of money, accruing or becoming payable to the United banks which did not redeem them in specie; a large porStates, to be collected and paid in the legal currency of tion of the banks in the Union, which had suspended the United States, or Treasury notes, or notes of the specie payments during the war, had not resumed them. Bank of the United States, as by law provided and de- | This resolution expressly limited the Secretary so far as clared, or in notes of banks which are payable and paid not to permit him to receive any bills of banks which on demand in the said legal currency of the United did not redeem them with specie. He is expressly proStates; and that, from and after the twentieth day of bibited from receiving the notes of non-specie-paying February next, no such duties, taxes, debts, or sums of banks; and it was lelt optional with him to collect the money, accruing or becoming payable to the United public revenue either in the lawful currency of the UniStates, as aforesaid, ought to be collected or received ted States, or in Treasury notes, or in the notes of speotherwise than in the legal currency of the United States, cie-paying banks. So far, a discretion was still left with or Treasury notes, or notes of the Bank of the United the Secretary; but the discretion he bad exercised of States, or in notes of banks which are payable and paid taking bills of banks which did not pay their notes in on demand in the said legal currency of the United specie, was taken from him. These bills were received Stutes."

by the Bank of the United States only as special depos. The Senator from Massachusetts, in a labored legalites, and the loss was thrown upon the Treasury. argument, has attempted to prove that this resolution This resolution was only an instruction to the Secrecreates a peculiar currency in regard to all branches of tary of the Treasury; it has neither the form nor the the public revenue, and all debts due the United States. language of a public act. The title shows clearly that He not only maintains that the resolution imposes an obli. the object of Congress was solely to secure the Treasury, gation on the Secretary to receive the notes of all banks and guard it against a loss from bad money. It is entiihat redeem their bills in specie at their counters, but tled “ A resolution relative to the more effectual collec. also that it enlarges the rights of payers, that it confers tion of the public revenue.” Can a mere instruction to on the debtors of the United States the legal right to the Secretary of the Treasury, as the fiscal agent of the pay their debts in paper currency; that is, in the notes Government, change the rights or obligations of the of specie.paying banks. He went so far as to assert, debtors of the United States Suppose a creditor should and stake his reputation as a lawyer on the question, that instruct his agent to receive payment for a debt in some a receiver, who should refuse to receive the notes of other than the legal currency, or to take less than the specie-paying banks, and wbich were known to him to sum due, or to receive payment in some kind of properbe such, would render himself liable to an action by the ly, would this confer on the debtor the legal right 10 party injured. He admits that the fact that the notes pay his debt, and discharge his liability, in either of the are issued by banks which pay their bills in specie, must wais specified? On a suit by the creditor, could he be made known to the receiver; so that, upon this con avail himself of such instructions to vary the nature of struction of the resolution, the receivability of paper is his liability? to depend on a fact, and that fact is to be decided by a The construction here contended for had always subordinate officer of the Government. The argument been given to the resolution of 1816; and the Senator of the gentleman, howeverable, was too elaborate, too re from Massachusetis had, on former occasions, regarded fined, to receive his assent. He had never believed that it in the same light, as had been shown by the extracts profound legal science was very necessary in construing read from his speech and report by the Senator from * plain statule law; nor did he believe that men of emi Missouri, (Mr. Bextor] It was a very extraordinary nent professional skill were always the safest expounders position attempted to be myintained, that for twenty of written laws, whether statutes or constitutional pro- years there had been a public law in force in the United visions. Cicero said, in his day, that the lawyers bad Slates, conferring on paper money, or bank bills, the spoiled many excellent institutions by their refinements; legal character of gold and silver, so far as regards the and we all know that, in our own times, by their forced payment of the revenue and all drbls due the United and strained constructions, they have mystified and per. States, and that the country has been inapprized of the verted many plain and good laws, and bewildered the existence of such law. An act to legalize paper money, clearest minds. Whether we look to the language or and make it a lawful tender for all debts to the United the manifest object and purpose of the resolution of 1816, States, is one of great importance, and would have been he thought there could be no difficulty in understanding likely to have excited general interest and attention. it. We are told by legal writers, thal, in giving a con The sixteenth section of the act chartering the Bank struction to statuies, it is necessary to ascertain the gen. of the United States provides that the deposites of the eral object of the law, the evils and mischiefs that exist-moneys of the United States shall be made in that bank ed, ani which the act was designed to remove; and more and its branches. But the bank had refused loʻreceive especially is this said to be necessary when the language the bills of certain banks, notwithstanding they were reof an act is doubtful or ambiguous.

deemed in specie, and bad been justified by Congress What was the object of the resolution of 1816, and what in so doing, in a report to that effect, drawn up by the were the evils it was intended to remedy? It is said that Senator himself. But if the resolution of 1816 gave to its object was to enlarge the rights of the debtors of the the bills of State banks all the character of gold and silUnited States, and to enable them to pay their debts in a ver, so far as regards dries to the Government, then more convenient and easy manner. But does this ap- such bills were the “money of the United States," and pear on the face of the resolution? Is it inferrible from the bank was bound by its charter to receive them on its title? And if we look to the state of the Treasury deposite. and the condition of the revenue at the time the rig. The Senator from Massachusetts referred to the fact, olution was adopted, we cannot fail to discover the that the President last session sent a message to Conevils which this resolution was intended to remedy, gres, recommending the repeal of the fourteenth sec. Instead of its object being to enlarge the rights of Ibe tion of the charter of the Bank of the United States,

Dec. 22, 1836.)

Treasury Circular.



which required that the notes of that bank should be such, too, he believed, as were contemplated by the Exreceived in all payments to the United States. He ecutive at the time the order was adopted. But as those could not perceive what inference could be drawn from who supported the resolution before the Senate took tbis fact, favorable to the gentleman's purpose; but it the affirmative of the issue, he might, perhaps, with appeared to him that the necessary inference was direct. more propriety, call on them to point out the evil conse. ly the contrary. The bills of the Bank of the United quences of the order. This they have atlempled to do, States were made receivable by the Government, by a but he thought with no very great success. It has been distinct provision in its charter; and the President wish-boldly asserted, that the Treasury order had deranged ed that section repealed, which would place them on the currency, and occasioned the existing difficulties and the same footing as other bank bills. But if the Sen pressure in regard to money, which he admitted to be ator is correct in his argument, it would have been of very severe.

This, sir, (said Mr. N.,) is no new comno use to repeal the fourteenth section of the bank char plaint against the present administration. It is the old ter, as the United States would still have been obliged story, which has been so often repeated within the last to receive the bills of that bank, under the resolution of few years, that its authors on the present occasion can 1816. Moreover, the fourteenth section was never of lay no claims to originality. On his way to this city, any importance to the Bank of the United States, if, as during a short detention in New York, he had a conis contended, the resolution of 1816 gave to the bills of versation with a merchant, who complained not only of all specie-paying banks the character of receivability for The times, but of the Government. It was, however, only debts payable to the United States. The bills of the a repetition of the old story, of tampering with the curs State banks, so far as regarded the Government, stood rency! ---War upon the currency! When will the Guyon the same footing as those of the Bank of the United ernment cease tampering with the currency? These States; although it has always been claimed that the complaints come with an ill grace from bankers, brokers, privilege conferred by the fourteenth section formed a and merchants, who are strenuous supporters of that inpart of the consideration for which the corporation had Alated system of paper money and credit, whose inherent paid a bonus of a million and a half of dollars.

defects are the source of the very evils which they deMr. President, if there is any doubt in regard to the

Mr. N. said that when he heard complaints like legal import and effect of the resolution of 1816, still these, he was forcibly reminded of an anı cdoie of Ducior there can be no question as to the kind of currency Franklin, who, wben in Europe, was a member of a which is receivable for the sales of the public lands. learned sociely, which had a regulation, that on certain The fourth section of the act of 1820, which superseded occasions each member was to suggest some problem in the credit system, and required that sales should be physical science, and each one present was to give an made for cash payments, settles that question. The explanation impromptu. The Doctor, who was fond of proviso to the fourth section is, “that no such lands starting game for philosophers, as he called it, proposed shall be sold at any public sale hereby authorized, for a this question: "How it was to be accounted for, ihat a less price than one dollar and lwenty-five cents, nor on barrel of fish would contain more salt than the barrel any other terms than cash payments." This section, it without the fish?" The explanations given by learned is true, is confined to lands forfeited to the United savans, although extremely ingenious, did not appear to States; but its spirit and language are in perfect accord-be entirely satisfactory. At last all eyes were turned ance with the other sections of the act. The clause towards the Doctor, who, it was supposed, could give a "cash payments," must be understood in its ordinary satisfactory solution of a problem he had suggestel. acceptation, in which sense it does not mean Treasury “Genilemen," said he,“ in the first place, the fact is notes, nor the notes of banks, but money, which is a not so." So in regard to the complaints of merchants legal tender by the laws of the United States. In the and politicians, so often repeated, of tampering with the ordinary acceptation, “caslı" signifies money, or that currency, it is a sufficient answer to say, the fact is not currency which is a lawful tender for debls. Any other These charges are without foundation, even if we construction would be to trifle will language, and an consider currency in the very comprehensive sense in insult to common sense.

which it appears to be regarded by the Senator from Mr. N. said that, without consuming more time on that Massachusetts, (Mr. WEBSTER.] who, if he correctly unpoint, he was satisfied that the objection to the Treasury derstood him, appears to consider currency as compre: order, on the ground of iis illegality, was entirely un hending not only bank bills, but bills of exchange, and founded.

every description of paper which was used to facilitare Mr. N. said he would now proceed to submit a few the transactions of commerce. This appeared to him to remarks on the o'her division of the subject. Hias the be altogether too comprehensive a view of the subject of Treasury order operated unjustly and injuriously to the currency, even in a commercial sense. It appeared to be interest of the country? Ilas it calised the embarrassments confounding currency and credit, which he had supposed and pressure for money which have prevailed so exten uere essen'ially distinct. In the small book which every sively and disastrously throughout the country, and partic. Senator bas on liis table, (containing the constitution of ularly in the large commercial cities? All these evils have the United States,) is a much better definition: he there been charged upon it, as the results of the derangement found, that “ Congress shall bave power to coin money, it has occasioned in the business and monetary concerns regulate the value thereof, and of foreign coin." Ilere of the country. In regard to the discrimination or ex we find what is the legal and constitutional currency of ception from its operation in behalf of actual settlers, and ibe United States. Gold and silver, either the coinage the citizens of ihe States in hich the lands were sold, as of the United States or foreign coin, the va'ue of which that exception had now ceased, he would not spend any has been fixed and regulated by a law of Congress, contime upon it.

stitute the only currency known to the constitution. The Senator from Kentucky (Mr. CRITTENDEN] asked, Hul, in a commercial sense, or in the common acceptawith an air of triumpli, what had been the good effecs tion, whatever circulates as money, and is received as of the order? Whilst its evils have been so manifes', such, in the ordinary transactions of society, may be and of such great magnitude, we have a right, said be, considered as a part of the currency of the country; and to call on its advocates to point out its benefits. Mr. N. in this view of the subject, bank bills form a part of our said that, in his preliminary remarks, he referred to what currency. But if we admit the bills of our banks to be appeared to have been some of the beneficial effects of 4 component part of the currency of the country, sull the order, and he wuuld not repeat them. They were the complaints, of which we have heard so much for


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some years past, are without any just foundation. What places of deposite of the public revenues, could have are the acts of this administration, which bave been de. occasioned the serious consequences which were char. nounced as lampering with the currency, and making ged upon it--the derangement of the currency, prostrawar on the currency? The first of them is the veto of tion of credit, the wide-spread embarrassments and disthe President of the bill fur rechartering the Bank of tress which prevailedmihe case would afford the the United States. This may have been a bold measure, strongest, the most irresistible, argument against the but great evils require powerful remedies; and it was whole paper credit system. If these consequences did confirmed and fully sustained by the people, and after follow from so small a cause, it proves the miserable, wards by Congress, which refused to give the bank an. wretched condition of your paper currency, which the other charter. If this measure had succeeded in destroy. Senator from Massachusetts seems to consider as preferaing the Bank of the United States, it might be consid. ble to gold and silver. ered, in some measure, as interfering with the currency Untsable and bad as he considered the paper currency of the country, if it can be made out that the bills of that of the country, he would make no such charge against bank possessed any essential qualities as money, or cur it; he did not believe it could be deranged, and the rency, which do not apperiain to the bills of the State whole country involved in difficulty and distress, by so banks. But he did not consider that the bills of that trifling a cause. No, sir, there was at that period a war bank possessed any material advantages, as money, over upon the currency; but it did not come from the Execthose of ihe State banks; for such were its regulations, utive, or this Government, but from the Bank of the that the different branches, so far as respects the re. United States, and other banks which from fear or favor demption of their bills, were so many independent banks. co-operated with it in its measures intended to distress It was not necessary, however, to consider this question, the country, and create a panic. That war on the cur. because the bank had not ceased to exist. No, unfor rency and on the country came from the great mamtunately for the country, the “monster" still lives; and, moth of the paper system, which possessed more power according to the declarations of its president, at the very over the currency than this Government; which could time of its resuscitation, under a charter ob ained from make paper money plenty or scarce at its pleasure. At one of the States, it inherits a circulation of twenty-iwo this day, he believed no one could be found who would inillions, and a credit throughout the world. We bave maintain that the embarrassments and distress which prethe word of its president that the bank still possesses its vailed during almost the entire year of 1834, were ocessential ability to do good, and, in the opinion of many, casioned by the change which was made in the manage. it has lost none of its powers of mischief. Whether for ment of the public revenue. good or for evil, thin, the bank still exists, and the Mr. N. said he now came to consider the last measure country has the benefit, if such it is, of that paper cur which had been condemned as a lampering with the currency which it can supply.

rency- the Treasury order of the 11th July, requiring The next act which has been condemned as an act of cash payments for the public lands. It is claimed that war upon the currency, is the Treasury order for re the money pressure which has prevailed for months moving the public deposites in 18.33. This, as is well past, and which still continues, has been occasioned by known, occasioned great excitement; the measure was this new regulation as to the sales of the public lands. denounced, in this ball a:id elsewhere, as illegal, uncon The Senator from Massachusetts (Mr. WEBSTER) did not sti utional, and an alarming usurpation, calculated to seem to advance this opinion with confidence; be said derange the currency, destroy public and private credit, there was a complication of causes; that this order, with and prostrate the entire business of the country. Now other causes, had occasioned the existing difficulties; the excitement has gone by, and the angry waves sub- but when he came to point out the other causes, they sided, and the measure already become, in some sense, did not appear to be very numerous or complicated, a matter of history, we can look back upon it dispas. and all of them centered in the executive department of sionately and calmly. And what was this alarming act the Gvernment. The complication of causes appeared of usurpation, this war upon the currency and credit of to consist of but two; the Treasury order, and the exethe country, which was to paralyze all the great inter-cution of the deposite act, or the apprehension of the ests of the nation? He did not speak with any refer manner in which that act was to be executed. That the ence to its legality or consti!utionality, but solely with deposite act had contributed to increase the money pres. regard to its effect on the currency and credit. Why, sure, Mr. N. did not doubt; but what properly belonged sir, (said Mr. N.,) this measure consisted simply of an to the act, ought not to be charged to the execution, or order from the Secretary of the Treasury changing the the apprehended execution. He reluctantly gave bis place of deposite of the public revenue, at a time when support to that act, although sensible at the time that it the money in the Treasury amounted to but about nine would increase, rather than relieve, the pressure for millions of dollars. The measure related only to the money, wbich prevailed. But it bad not been shown money of the United States; it had no application what that any censure was justly chargeable upon the Secreever to the currency of the country, whether metallic or tary for the execution of the law. It was impossible but paper; it had no operation upon commerce, or duties, that the act should orcasion some temporary inconvenior importations. This act, which was said to derange ence in the monelary concerns of the country. It disthe currency and destroy credit, was nothing more than poses of a large sum of money, nearly forty millions, the control and management of the funds belonging to upon principles altogether foreign to the commercial the people of the United States, in no way interfering principles which control and regulate the moneyed capiwith the transactions of commerce, or currency, or ial of ihe country. Population is not the principle upon credil. Cannot the Government take care of their own which commerce distributes money. finds, and manage them as they think best, without be. Mr. N. said that, in relation to the Treasury order, he ing charged with making war on the currency? without would not deny that in some small degree it may bave an outcry from bankers, brokers, and merchants, that increased the difficulties which exist. It had increased their business is injured, and the whole country exposed the demand for specie, and that was the principal ob. to ruin? Must the Secretary of the Treasury consult the ject of the measure, to obtain something of real value barkers before he can decide on any measure in relation for the public lands. Its operation bas been to replento the public funds? If an act, having no bearing on ish the deposite banks in the West with specie funds, commerce, in no way directly affecting any of the inter. and to draw them from the banks at the East, which has ests of the country, and which merely changed the 10 some extent, diminished the ability of the latter to

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make loans. But a contraction of the paper currency / tion, the creation of banking capital would not add to had long before commenced; and that contraction must the paper currency. But that principle is incorrect; the necessarily produce a curtailment in the loans and dis paper issues of banks are found to depend mainly on the counts of banks. The Treasury order only co-operated capital which shall be employed in banking operations. with other causes in producing results which were inev. What proportion the circulation will bear to the banking itable. To regard the Treasury oriler as the efficient capital was not clearly cstablished, but it would not vary cause of the present crisis would be like an attempt to far from thirly per cent. If gentlemen will look into find one's way by a taper, and close his eyes to the sun, the report of the Secretary of the Treasury, just laid on which was enightening the world. The real cause of vur tables, they will find that the deposite banks, with a the existing pressure is much broader and deeper than capital of seventy-seven millions, have a circulation of the Treasury order; it is a cause which is inherent in the forty-one millions, or more than fifty per cent. These banking system, and in that paper currency which we banks, it is true, possess large sums in deposite, so that have just heard commended as preferable to gold and their circulation is, no doubt, considerably larger, in silver. There are laws which act upon and control the proportion to their capital, than the general average. paper system of currency, supplied by banks, which are Sir, (said Mr. N.,) are ue to be told, in the face of as immutable as those that govern the physical universe. these strong facts, that there has been no undue enlargeOne of ihese laws is, that a sudden expansion of the cur ment of the paper currency and the credit system the rency, even to an inconsiderable amount, gives an undue last two years? Are we to believe that this increase has stimulus to enterprise, that occasions and been occasioned by the general rise in the value of propspeculation, which will continue to increase, until they eriy, Has properly advanced nearly fifty per cent. in are checked by a riaction in the money market, when two years? And if such was the fact, what reason can a contraction of the currency ensues, by the banks be. be assigned for such an unprecedented advance in the ing obliged to curtail their discounts. This occasions a value of property in so short a period, except the superscarcity of money.

abundance of the paper currency? But it seems to be denied that there has been any dari. That the flood of paper money, and the great extengerous or essential enlargement of the paper currency.

sion of bank credits, were the original and efficient cause The Senator froin Massachusetts admits that there has of the embarrassments and difficulties which had prevailed been a great augmentation of banking capital within the for nearly one year, was clear beyond any reasonable last two or three years, but attributes it to the rapid and doubt. Even a very small addition to the currency exunparalleled a-lvance in the value of real estate and oth cites to over-trading and speculation, and an advance of er properly. It appeared to him this was taking the ef prices. This has been found to be invariably the case fect for the cause. What has occasioned the rapid rise in in England, and in this country since the establishment the price of real estate and other property? Is it no: the of the Bank of the United States. All periods of excitefood of paper money with which ihe country has been in ment and speculation, in boih countries, have been preundated for the last few years, and the widespread and ceded by an increase of money or credit, or both. The extravagant speculations to which it has given rise! If year 1835 and the first half of the year 1836, have been this was not the cause, he would like to know what it distinguished for speculation in stocks, real estate, and was. Jas there not been an alarming increase of bank every kind of property, and for the unprecedented mulcapital, anıl, of course, bank circulation, the last few tiplication of joint stock companies, for almost every conyears? The bank capital of the State banks was esti ceivable object. A reaction has ensued, and there is now mated by Mr. Gulatin, in 1830, at ninety-five millions of great distress in that country for money, as well as in this. dollars, and the bark circulation at thiriy-nine millions. This spirit of speculation and gambling is there attribuThe annual report of the Secretary of the Treasury, a year ted to an expansion of the paper currency, although the ago, contained returns from nearly all the State banks; ac increase of paper appears to be triping compared 10 cording to which, the capital of the State banks, on the what has taken place in this country. In 1833, there 1st January, 1835, amounted to about ninety-six millions, were but thirty-four joint stock banks in England, and their circulation to about eighty-six millions. Since that in July, 1836, they bad increased to seventy-seven. period, the increase of bank capital has been astonish

Their issues in 1834 were £1,783,600, and in 1836, ingly rapiil. It is thought to have exceeded one hun. £3,094,025, being an increase of less than a million and dred millions, and the circulation to have been increased a half. In the mean time, the private banks had not in. fifty millions. But in addition to this, the Bank of the Uni. creased, but to a small amount had contracted their is. ted States has been rechartered the year past, with a capi- sues. So small an addition to the paper currency as this tal of thirty-five millions, and has the possession of seven is considered as the cause of the rage of speculation and millions belonging to the United States; making a capital gambling which has prevailed, and of the distress that of forty-two millions. During the past year, there has

has followed. also been a sum of from thirty to foriy millions of dollars Mr. N. said that, in support and corroboration of these of the public revenue in the deposite banks, which has views, he would ask the Secretary to read some short been used for banking purposes, and constituted a part extracts from two recent writers in thal country, which of their capital. The whole addition to the banking

he had copied: capital of the country, since January, 1835, must consid

Exlract from Mushet. erably exceed one hundred and fifiy millions of dollars, and the addition to the circulation filly millions.

"In 1819, the Bank of England and the country banks In his report, the present session, ihe Secretary esti curtailed their issues about 15 per cent., and consols fell mates the circulation of bank paper, on the first of the about 14 per cent.; in 1820, the country banks curtailed present month, at one hundred and twenty millions; but 32 per cent.; in 1821, 28 per cent. A fall of prices thinks that in July it considerably exceeded that surn. and scarcity of money followed; and 1819, '20, and '21, Mr. N. thought this estimate below the truth, because it were years of great distress in England. One of the was found that the issues of banks would bear a certain great evils from the great fluctuation in the amount of proportion to their capitals. If it was true, as was sup. the currency, is the spirit of gambling which it engen. posed by Adam Smith, who wrote at a time when the ders. It is the sudden abundance of money, which is subject of banking was very imperfectly understood, the main-spring of all gambling transactions in our funds, thai no more paper money could be circulated than ard in articles of general consumptions and the rise in would supply the specie which it forced out of circula. I prices is forced by speculative buying and selling, con.


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