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early apprized of what is to be the policy of the majority, and of the coming administration, on those important subjects. He had heard the remark with some surprise, not thinking it called for or justified by the occasion. Without stopping to inquire what are the opinions of the Senator from Missouri, or what they are considered to be by the gentleman from Massachusetts, he must be permitted to say that no such conclusions could justly follow the decision of the question before the Senate.

There were reasons, he thought weighty reasons, which would justify Senators in voting against this resolution, without committing themselves in any sense, or in any degree, in regard to the great questions of currency and revenue, to which the Senator had referred. Without reference to what might be his opinion as to the true policy of the Government in the collection of the revenue, whether from the public lands or the customs, he was prepared to vote against this resolution. To pass this resolution, would be to censure and condemn an act of the Executive as being wrong, ab initio, or at the time of its adoption. Whether the rule prescribed in the Treasury order be a wise and just one, for the settled action of the Government, is a question entirely distinct from that, whether it may have been expedient and proper at the time it was adopted. He was satisfied that the Treasury order could be justified, viewed as a temporary measure only, intended to remedy evils of great magnitude, arising from the extraordinary circumstances connected with the sales of the public lands; and he was not sure that this was not the true light in which it ought to be considered. It was the duty of the Executive to watch over the public revenue, and see that it was secure. Was there no hazard from the extensive and gambling speculations in the public lands paid for only in bank bills, which were handed over by the receivers to the deposite banks and placed to the credit of the United States? A large portion of the purchases were paid for in bills of the deposite banks, which, after going into the hands of the receivers, were returned and loaned out again, to go through the same operation. This was virtually reviving the old credit system, as the United States received nothing but credit for the lands. If there was no hazard to the revenue from these practices, and from the magnitude and extent of the sales made upon this kind of credit, then gentlemen over the way had altered their opinions very much within the last six months. During the last session of Congress, we were repeatedly, and almost daily, told by those who now oppose the Treasury order, that the funds of the Government in the Western deposite banks were insecure, and that nothing but credit was received for the public lands. Can gentlemen have forgotten their often-repeated declarations on this subject? If so, they must be blessed with short memories. Again and again did Senators refer to the small amount of specie in those banks, and an impression was attempted to be made, that their specie funds were the only solid security for the large sums due the United States.

The order was calculated to correct, and, to a considerable extent, no doubt, has corrected, this evil. It insured something valuable for the lands, and that something valuable was transferred to the deposite banks, and formed a more solid basis for the Government credits.

The order was also calculated to check speculation in the public lands, which, in itself, was an evil of no small magnitude, transferring the best part of the national domain into the hands of heartless speculators, to the great injury of actual settlers, and the detriment of the whole country. Public opinion was rising up against it, and required that something should be done to arrest an evil of so extensive and serious a nature. What other or better measure could have been adopted, until Congress

[SENATE.

should convene, which might adopt such further legislation in regard to the sales of the lands as the public interests may require?

Sir, (said Mr. N.,) there is another reason why I cannot vote for the resolution before the Senate. A new rule has been adopted in regard to the sale of the public lands, that has been in operation for a time, and which has a tendency to check speculation. I would not repeal that rule, and open again the floodgates of speculation; certainly not until I know whether Congress will pass any act regulating the sale of the public lands. It is, I think, the duty of Congress to do this; the interest of the country requires it; public sentiment demands it; and it is strongly recommended by the President. If Congress suffer the session to pass off, without attempting to regulate the sale of the public lands so as to check speculation, they will neglect their duty to the country. Believing that there will be additional legislation on the subject, which may supersede the Treasury order, he was not at this time prepared to disturb it. Changes in any extensive business are always attended with some inconvenience, and should be avoided as much as possible. When it shall be settled that Congress will not alter the system, it may become necessary to decide whether the rule prescribed in the order shall be maintained, or the old practice restored; and if we do any thing on this subject, our action should be more comprehensive; it should embrace the whole subject, and be settled by law what currency shall be received for the payment of the revenues, not only from the lands, but from customs and all other dues. The doubt and uncertainty which hangs over this subject ought to be removed.

For these reasons, therefore, he should vote against rescinding the Treasury order, even if he was satisfied that the rule it prescribes was not one which it would be expedient and just to establish as a settled policy.

In this view of the subject, he had thrown out of the case the legal objection which has been raised against the Treasury order.

Mr. President, there are two general grounds of objection that have been urged against the order which the resolution on your table proposes to rescind, which I will proceed to consider. The first objection is, that it is illegal; the second, that its operation is partial, unjust, and injurious to the country, and has been the principal cause of the embarrassments and pressure for money which have been so extensively experienced.

It has also been claimed by the Senator from Ohio, [Mr. EWING,] that the order is unconstitutional, that it conflicts with that provision of the constitution which declares that "the citizens of each State shall be entitled to all the rights and immunities of the citizens of the several States." This, however, is a very small point, so small that the Senator seemed to find it difficult to stand upon it; it was quite too small for him to waste the time of the Senate abou', and he should therefore pass it over.

Is the Treasury order contrary to law? If it is, it ought to be rescinded, without regard to other considerations. Congress is empowered to lay taxes, and to authorize and regulate the sale of the public lands; and, in doing this, it can no doubt direct the kind of money or currency which shall be received in payment. But if it neglect to do this, it becomes the duty of the Executive, who is charged with executing the law, to receive pay. ment for taxes and lands in the legal currency of the United States. What that legal currency is, there can be no dispute, so that the only question which can arise is, whether there is any law which authorizes the payment of the revenue and debts due the United States, in any other currency, or in any other way. It is claimed that the joint resolution of 1816 requires the Secretary of

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the Treasury to collect the taxes and debts due the United States in a currency different from the legal currency of the country. That resolution provides "that the Secretary of the Treasury be required and directed to adopt such measures as he may deem necessary, to cause, as soon as may be, all duties, taxes, debts, or sums of money, accruing or becoming payable to the United States, to be collected and paid in the legal currency of the United States, or Treasury notes, or notes of the Bank of the United States, as by law provided and declared, or in notes of banks which are payable and paid on demand in the said legal currency of the United States; and that, from and after the twentieth day of February next, no such duties, taxes, debts, or sums of money, accruing or becoming payable to the United States, as aforesaid, ought to be collected or received otherwise than in the legal currency of the United States, or Treasury notes, or notes of the Bank of the United States, or in notes of banks which are payable and paid on demand in the said legal currency of the United States."

- [DEC. 22, 1836.

debtors of the Government, it was designed to restrict them, and did restrict them. What was the condition of your Treasury at that period, and how was the revenue collected? There was then in the Treasury more than one million of dollars in the bills of broken banks; and the public revenue bad been collected in the notes of banks which did not redeem them in specie; a large portion of the banks in the Union, which had suspended specie payments during the war, had not resumed them. This resolution expressly limited the Secretary so far as not to permit him to receive any bills of banks which did not redeem them with specie. He is expressly probibited from receiving the notes of non-specie-paying ❘ banks; and it was left optional with him to collect the public revenue either in the lawful currency of the United States, or in Treasury notes, or in the notes of specie-paying banks. So far, a discretion was still left with the Secretary; but the discretion he had exercised of | taking bills of banks which did not pay their notes in specie, was taken from him. These bills were received 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 creates a peculiar currency in regard to all branches of the public revenue, and all debts due the United States. He not only maintains that the resolution imposes an obligation on the Secretary to receive the notes of all banks that redeem their bills in specie at their counters, but also that it enlarges the rights of payers, that it confers on the debtors of the United States the legal right to pay their debts in paper currency; that is, in the notes of specie-paying banks. He went so far as to assert, and stake his reputation as a lawyer on the question, that a receiver, who should refuse to receive the notes of specie-paying banks, and which were known to him to be such, would render himself liable to an action by the party injured. He admits that the fact that the notes are issued by banks which pay their bills in specie, must be made known to the receiver; so that, upon this construction of the resolution, the receivability of paper is to depend on a fact, and that fact is to be decided by a subordinate officer of the Government. The argument of the gentleman, however able, was too elaborate, toorefined, to receive his assent. He had never believed that profound legal science was very necessary in construing a plain statute law; nor did he believe that men of eminent professional skill were always the safest expounders of written laws, whether statutes or constitutional pro- | visions. Cicero said, in his day, that the lawyers had spoiled many excellent institutions by their refinements; and we all know that, in our own times, by their forced and strained constructions, they have mystified and perverted many plain and good laws, and bewildered the clearest minds. Whether we look to the language or the manifest object and purpose of the resolution of 1816, he thought there could be no difficulty in understanding it. We are told by legal writers, that, in giving a construction to statutes, it is necessary to ascertain the general object of the law, the evils and mischiefs that existed, and which the act was designed to remove; and more especially is this said to be necessary when the language of an act is doubtful or ambiguous.

This resolution was only an instruction to the Secretary of the Treasury; it has neither the form nor the language of a public act. The title shows clearly that the object of Congress was solely to secure the Treasury, and guard it against a loss from bad money. It is entitled "A resolution relative to the more effectual collection of the public revenue." Can a mere instruction to the Secretary of the Treasury, as the fiscal agent of the Government, change the rights or obligations of the debtors of the United States? Suppose a creditor should instruct his agent to receive payment for a debt in some other than the legal currency, or to take less than the sum due, or to receive payment in some kind of property, would this confer on the debtor the legal right to pay his debt, and discharge his liability, in either of the ways specified? On a suit by the creditor, could he avail himself of such instructions to vary the nature of his liability?

What was the object of the resolution of 1816, and what were the evils it was intended to remedy? It is said that its object was to enlarge the rights of the debtors of the United States, and to enable them to pay their debts in a more convenient and easy manner. But does this appear on the face of the resolution? Is it inferrible from its title? And if we look to the state of the Treasury and the condition of the revenue at the time the resolution was adopted, we cannot fail to discover the evils which this resolution was intended to remedy. Instead of its object being to enlarge the rights of the

The construction here contended for had always been given to the resolution of 1816; and the Senator from Massachusetts had, on former occasions, regarded it in the same light, as had been shown by the extracts read from his speech and report by the Senator from Missouri, [Mr. BENTON] It was a very extraordinary position attempted to be maintained, that for twenty years there had been a public law in force in the United States, conferring on paper money, or bank bills, the legal character of gold and silver, so far as regards the payment of the revenue and all debts due the United States, and that the country has been unapprized of the existence of such law. An act to legalize paper money, and make it a lawful tender for all debts to the United States, is one of great importance, and would have been likely to have excited general interest and attention.

The sixteenth section of the act chartering the Bank of the United States provides that the deposites of the moneys of the United States shall be made in that bank and its branches. But the bank had refused to receive the bills of certain banks, notwithstanding they were redeemed in specie, and had been justified by Congress in so doing, in a report to that effect, drawn up by the Senator himself. But if the resolution of 1816 gave to the bills of State banks all the character of gold and silver, so far as regards dues to the Government, then such bills were the "money of the United States," and the bank was bound by its charter to receive them on deposite.

The Senator from Massachusetts referred to the fact, that the President last session sent a message to Congres, recommending the repeal of the fourteenth section of the charter of the Bank of the United States,

DEC. 22, 1836.]

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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 this 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 attempted 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 same footing as other bank bills. But if the Senator is correct in his argument, it would have been of no 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 to receive the bills of that bank, under the resolution of 1816. Moreover, the fourteenth section was never of any importance to the Bank of the United States, if, as is contended, the resolution of 1816 gave to the bills of all specie-paying banks the character of receivability for debts payable to the United States. The bills of the State banks, so far as regarded the Government, stood on the same footing as those of the Bank of the United States; although it has always been claimed that the privilege conferred by the fourteenth section formed a part of the consideration for which the corporation had paid a bonus of a million and a half of dollars.

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Mr. President, if there is any doubt in regard to the legal import and effect of the resolution of 1816, still there can be no question as to the kind of currency which is receivable for the sales of the public lands. The fourth section of the act of 1820, which superseded the credit system, and required that sales should be made for cash payments, settles that question. The proviso to the fourth section is, "that no such lands shall be sold at any public sale hereby authorized, for a less price than one dollar and twenty-five cents, nor on any other terms than cash pay ments.' This section, it is true, is confined to lands forfeited to the United States; but its spirit and language are in perfect accordance with the other sections of the act. The clause "cash payments," must be understood in its ordinary acceptation, in which sense it does not mean Treasury notes, nor the notes of banks, but money, which is a legal tender by the laws of the United States. In the ordinary acceptation, "cash" signifies money, or that currency which is a lawful tender for debts. Any other construction would be to trifle with language, and an insult to common sense.

Mr. N. said that, without consuming more time on that point, he was satisfied that the objection to the Treasury order, on the ground of its illegality, was entirely unfounded.

Mr. N. said he would now proceed to submit a few remarks on the other division of the subject. Has the Treasury order operated unjustly and injuriously to the interest of the country? Has it caused the embarrassments and pressure for money which have prevailed so extensively and disastrously throughout the country, and particularly in the large commercial cities? All these evils have been charged upon it, as the results of the derangement it has occasioned in the business and monetary concerns of the country. In regard to the discrimination or exception from its operation in behalf of actual settlers, and the citizens of the States in which the lands were sold, as that exception had now ceased, he would not spend any time upon it.

The Senator from Kentucky [Mr. CRITTENDEN] asked, with an air of triumph, what had been the good effects of the order? Whilst its evils have been so manifest, and of such great magnitude, we have a right, said he, to call on its advocates to point out its benefits. Mr. N. said that, in his preliminary remarks, he referred to what appeared to have been some of the beneficial effects of the order, and he would not repeat them. They were

the currency, and occasioned the existing difficulties and pressure in regard to money, which he admitted to be very severe. This, sir, (said Mr. N.,) is no new comstory, which has been so often repeated within the last few years, that its authors on the present occasion can lay no claims to originality. On his way to this city, during a short detention in New York, he had a conversation with a merchant, who complained not only of the times, but of the Government. It was, however, only a repetition of the old story, of tampering with the currency!-war upon the currency! When will the Government cease tampering with the currency? These complaints come with an ill grace from bankets, brokers, and merchants, who are strenuous supporters of that inflated system of paper money and credit, whose inherent defects are the source of the very evils which they denounce. Mr. N. said that when he heard complaints like these, he was forcibly reminded of an anecdote of Doctor Franklin, who, when in Europe, was a member of a learned society, which had a regulation, that on certain occasions each member was to suggest some problem in physical science, and each one present was to give an explanation impromptu. The Doctor, who was fond of starting game for philosophers, as he called it, proposed this question: "How it was to be accounted for, that a barrel of fish would contain more salt than the barrel without the fish?" The explanations given by learned savans, although extremely ingenious, did not appear to be entirely satisfactory. At last all eyes were turned towards the Doctor, who, it was supposed, could give a satisfactory solution of a problem he had suggested. "Gentlemen," said he, "in the first place, the fact is not so." So in regard to the complaints of merchants and politicians, so often repeated, of tampering with the currency, it is a sufficient answer to say, the fact is not These charges are without foundation, even if we consider currency in the very comprehensive sense in which it appears to be regarded by the Senator from Massachusetts, [Mr. WEBSTER] who, if he correctly understood him, appears to consider currency as compre. hending not only bank bills, but bills of exchange, and every description of paper which was used to facilitate the transactions of commerce. This appeared to him to be altogether too comprehensive a view of the subject of currency, even in a commercial sense. It appeared to be confounding currency and credit, which he had supposed were essentially distinct. In the small book which every Senator has on his table, (containing the constitution of the United States,) is a much better definition: he there found, that Congress shall have power to coin money, regulate the value thereof, and of foreign coin." Here we find what is the legal and constitutional currency of the United States. Gold and silver, either the coinage of the United States or foreign coin, the value of which has been fixed and regulated by a law of Congress, constitute the only currency known to the constitution.

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But, in a commercial sense, or in the common acceptation, whatever circulates as money, and is received as sach, in the ordinary transactions of society, may be considered as a part of the currency of the country; and in this view of the subject, bank bills form a part of our currency. But if we admit the bills of our banks to be a component part of the currency of the country, still the complaints, of which we have heard so much for

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Treasury Circular.

some years past, are without any just foundation. What are the acts of this administration, which have been denounced as tampering with the currency, and making war on the currency? The first of them is the veto of the President of the bill for rechartering the Bank of the United States. This may have been a bold measure, but great evils require powerful remedies; and it was confirmed and fully sustained by the people, and afterwards by Congress, which refused to give the bank another charter. If this measure had succeeded in destroying the Bank of the United States, it might be considered, in some measure, as interfering with the currency of the country, if it can be made out that the bills of that bank possessed any essential qualities as money, or currency, which do not appertain to the bills of the State banks. But he did not consider that the bills of that bank possessed any material advantages, as money, over those of the State banks; for such were its regulations, that the different branches, so far as respects the redemption of their bills, were so many independent banks. It was not necessary, however, to consider this question, because the bank had not ceased to exist. No, unfortunately for the country, the "monster" still lives; and, according to the declarations of its president, at the very time of its resuscitation, under a charter obtained from one of the States, it inherits a circulation of twenty-two millions, and a credit throughout the world. We have the word of its president that the bank still possesses its essential ability to do good, and, in the opinion of many, it has lost none of its powers of mischief. Whether for good or for evil, then, the bank still exists, and the country has the benefit, if such it is, of that paper currency which it can supply.

The next act which has been condemned as an act of war upon the currency, is the Treasury order for removing the public deposites in 1833. This, as is well known, occasioned great excitement; the measure was denounced, in this hall and elsewhere, as illegal, unconsti utional, and an alarming usurpation, calculated to derange the currency, destroy public and private credit, and prostrate the entire business of the country. Now the excitement has gone by, and the angry waves subsided, and the measure already become, in some sense, a matter of history, we can look back upon it dispassionately and calmly. And what was this alarming act of usurpation, this war upon the currency and credit of the country, which was to paralyze all the great interests of the nation? He did not speak with any reference to its legality or constitutionality, but solely with regard to its effect on the currency and credit. Why, sir, (said Mr. N.,) this measure consisted simply of an order from the Secretary of the Treasury changing the place of deposite of the public revenue, at a time when the money in the Treasury amounted to but about nine millions of dollars. The measure related only to the money of the United States; it had no application whatever to the currency of the country, whether metallic or paper; it had no operation upon commerce, or duties, or importations. This act, which was said to derange the currency and destroy credit, was nothing more than the control and management of the funds belonging to the people of the United States, in no way interfering with the transactions of commerce, or currency, or credit. Cannot the Government take care of their own funds, and manage them as they think best, without being charged with making war on the currency? without an outcry from bankers, brokers, and merchants, that their business is injured, and the whole country exposed to ruin? Must the Secretary of the Treasury consult the bankers before he can decide on any measure in relation to the public funds? If an act, having no bearing on commerce, in no way directly affecting any of the interests of the country, and which merely changed the

[DEC. 22, 1836.

places of deposite of the public revenues, could have occasioned the serious consequences which were charged upon it--the derangement of the currency, prostration of credit, the wide-spread embarrassments and distress which prevailed-the case would afford the strongest, the most irresistible, argument against the whole paper credit system. If these consequences did follow from so small a cause, it proves the miserable, wretched condition of your paper currency, which the Senator from Massachusetts seems to consider as preferable to gold and silver.

Untsable and bad as he considered the paper currency of the country, he would make no such charge against it; he did not believe it could be deranged, and the whole country involved in difficulty and distress, by so trifling a cause. No, sir, there was at that period a war upon the currency; but it did not come from the Executive, or this Government, but from the Bank of the United States, and other banks which from fear or favor co-operated with it in its measures intended to distress the country, and create a panic. That war on the currency and on the country came from the great mammoth of the paper system, which possessed more power over the currency than this Government; which could make paper money plenty or scarce at its pleasure. At this day, he believed no one could be found who would maintain that the embarrassments and distress which prevailed during almost the entire year of 1834, were occasioned by the change which was made in the manage. ment of the public revenue.

Mr. N. said he now came to consider the last measure which had been condemned as a tampering with the currency-the Treasury order of the 11th July, requiring cash payments for the public lands. It is claimed that the money pressure which has prevailed for months past, and which still continues, has been occasioned by this new regulation as to the sales of the public lands. The Senator from Massachusetts [Mr. WEBSTER] did not seem to advance this opinion with confidence; he said there was a complication of causes; that this order, with other causes, had occasioned the existing difficulties; but when he came to point out the other causes, they did not appear to be very numerous or complicated, and all of them centered in the executive department of the Government. The complication of causes appeared to consist of but two; the Treasury order, and the execution of the deposite act, or the apprehension of the manner in which that act was to be executed. That the deposite act had contributed to increase the money pres sure, Mr. N. did not doubt; but what properly belonged to the act, ought not to be charged to the execution, or the apprehended execution. He reluctantly gave his support to that act, although sensible at the time that it would increase, rather than relieve, the pressure for money, which prevailed. But it had not been shown that any censure was justly chargeable upon the Secretary for the execution of the law. It was impossible but that the act should occasion some temporary inconvenience in the monetary concerns of the country. It disposes of a large sum of money, nearly forty millions, upon principles altogether foreign to the commercial principles which control and regulate the moneyed capital of the country. Population is not the principle upon which commerce distributes money.

Mr. N. said that, in relation to the Treasury order, be would not deny that in some small degree it may have increased the difficulties which exist. It had increased the demand for specie, and that was the principal object of the measure, to obtain something of real value for the public lands. Its operation has been to replenish the deposite banks in the West with specie funds, and to draw them from the banks at the East, which has to some extent, diminished the ability of the latter to

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make loans. But a contraction of the paper currency had long before commenced; and that contraction must necessarily produce a curtailment in the loans and discounts of banks. The Treasury order only co-operated with other causes in producing results which were inev. itable. To regard the Treasury order as the efficient cause of the present crisis would be like an attempt to find one's way by a taper, and close his eyes to the sun, which was enlightening the world. The real cause of the existing pressure is much broader and deeper than the Treasury order; it is a cause which is inherent in the banking system, and in that paper currency which we have just heard commended as preferable to gold and silver. There are laws which act upon and control the paper system of currency, supplied by banks, which are as immutable as those that govern the physical universe. One of these laws is, that a sudden expansion of the currency, even to an inconsiderable amount, gives an undue stimulus to enterprise, that occasions over-trading and speculation, which will continue to increase, until they are checked by a reaction in the money market, when a contraction of the currency ensues, by the banks being obliged to curtail their discounts. This occasions a scarcity of money.

But it seems to be denied that there has been any dangerous or essential enlargement of the paper currency. The Senator from Massachusetts admits that there has been a great augmentation of banking capital within the last two or three years, but attributes it to the rapid and unparalleled advance in the value of real estate and other property. It appeared to him this was taking the effect for the cause. What has occasioned the rapid rise in the price of real estate and other property? Is it not the flood of paper money with which the country has been inundated for the last few years, and the wide-spread and extravagant speculations to which it has given rise? If this was not the cause, he would like to know what it was. Has there not been an alarming increase of bank capital, and, of course, bank circulation, the last few years? The bank capital of the State banks was estimated by Mr. Gallatin, in 1830, at ninety-five millions of dollars, and the bank circulation at thirty-nine millions. The annual report of the Secretary of the Treasury, a year ago, contained returns from nearly all the State banks; according to which, the capital of the State banks, on the 1st January, 1835, amounted to about ninety-six millions, their circulation to about eighty-six millions. Since that period, the increase of bank capital has been astonishingly rapid. It is thought to have exceeded one hundred millions, and the circulation to have been increased fifty millions. But in addition to this, the Bank of the United States has been rechartered the year past, with a capital of thirty-five millions, and has the possession of seven millions belonging to the United States; making a capital of forty-two millions. During the past year, there has also been a sum of from thirty to forty millions of dollars of the public revenue in the deposite banks, which has been used for banking purposes, and constituted a part of their capital. The whole addition to the banking capital of the country, since January, 1835, must considerably exceed one hundred and fifty millions of dollars, and the addition to the circulation fifty millions.

In his repert, the present session, the Secretary estimates the circulation of bank paper, on the first of the present month, at one hundred and twenty millions; but thinks that in July it considerably exceeded that sum. Mr. N. thought this estimate below the truth, because it was found that the issues of banks would bear a certain proportion to their capitals. If it was true, as was supposed by Adam Smith, who wrote at a time when the subject of banking was very imperfectly understood, that no more paper money could be circulated than would supply the specie which it forced out of circulaVOL. XIII.-8

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tion, the creation of banking capital would not add to the paper currency. But that principle is incorrect; the paper issues of banks are found to depend mainly on the capital which shall be employed in banking operations. What proportion the circulation will bear to the banking capital was not clearly established, but it would not vary far from thirty per cent. If gentlemen will look into the report of the Secretary of the Treasury, just laid on our tables, they will find that the deposite banks, with a capital of seventy-seven millions, have a circulation of forty-one millions, or more than fifty per cent. These banks, it is true, possess large sums in deposite, so that their circulation is, no doubt, considerably larger, in proportion to their capital, than the general average.

Sir, (said Mr. N.,) are we to be told, in the face of these strong facts, that there has been no undue enlargement of the paper currency and the credit system the last two years? Are we to believe that this increase has been occasioned by the general rise in the value of property? Has property advanced nearly fifty per cent. in two years? And if such was the fact, what reason can be assigned for such an unprecedented advance in the value of property in so short a period, except the superabundance of the paper currency?

That the flood of paper money, and the great extension of bank credits, were the original and efficient cause of the embarrassments and difficulties which had prevailed for nearly one year, was clear beyond any reasonable doubt. Even a very small addition to the currency excites to over-rading and speculation, and an advance of prices. This has been found to be invariably the case in England, and in this country since the establishment of the Bank of the United States. All periods of excitement and speculation, in both countries, have been preceded by an increase of money or credit, or both. The year 1835 and the first half of the year 1836, have been distinguished for speculation in stocks, real estate, and every kind of property, and for the unprecedented multiplication of joint stock companies, for almost every conceivable object. A reaction has ensued, and there is now great distress in that country for money, as well as in this. This spirit of speculation and gambling is there attributed to an expansion of the paper currency, although the increase of paper appears to be trifling compared to what has taken place in this country. In 1833, there were but thirty-four joint stock banks in England, and in July, 1836, they had increased to seventy-seven. Their issues in 1834 were £1,783,600, and in 1836, £3,094,025, being an increase of less than a million and a half. In the mean time, the private banks had not increased, but to a small amount had contracted their issues. So small an addition to the paper currency as this is considered as the cause of the rage of speculation and gambling which has prevailed, and of the distress that has followed.

Mr. N. said that, in support and corroboration of these views, he would ask the Secretary to read some short extracts from two recent writers in that country, which he had copied:

Extract from Mushet.

"In 1819, the Bank of England and the country banks curtailed their issues about 15 per cent., and consols fell about 14 per cent.; in 1820, the country banks curtailed 32 per cent.; in 1821, 28 per cent. A fall of prices and scarcity of money followed; and 1819, '20, and '21, were years of great distress in England. One of the great evils from the great fluctuation in the amount of the currency, is the spirit of gambling which it engenders. It is the sudden abundance of money, which is the main-spring of all gambling transactions in our funds, and in articles of general consumption; and the rise in prices is forced by speculative buying and selling, con.

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