The Sun.
London, England, 1837-06-15 00:00:00

CURRENCY

AND COMMERCE OF

THE UNITED STATES.

LETTER FROM MR. BIDDLE TO THE HON. J. Q.

ADAMS.
(From the American National Gazette.)
Philadelphia, May 13, 1837.
My DEAR SIR—You were good enough to express a
wish to know my own views of the present state of things,
and I hasten to give them without reserve.
You may perhaps remember that in my letter to you of
the 11th of November last I stated what seemed the real
causes of the embarrassments then existing, and the appro-
priate remedies for them, adding, that by their adoption
" confidence would be restored in twenty-four hours, and
repose at least in as many days." Six months further ex-
perience has only confirmed that opinion. I believe now,
as I believed then, that the events of this week might have
been readily prevented, and that the unhappy perseverance
in the measures then deprecated, has reduced the country
to its present condition. But I have no leisure now to
discuss the subject, and no disposition to indulge in unavail-
ing regrets. It will be more profitable to look distinctly at
the present position of the banks and the country, and to
suggest their respective duties to themselves and to each
other.

All the deposit banks of the Government of the United
States in the city of New York suspended specie payments
this week ; the deposit banks elsewhere have followed their
example ; which was of course adopted by the State banks
not connected with the Government. I say of course, be-
cause it is certain that when the Government banks cease to
pay specie, the other banks must cease, and for this clear rea-
son. The great creditor of the United States is the Govern-
ment. It receives for duties the notes of the various banks,
which are placed for collection in certain Government banks,
and are paid to those Government banks in specie if re-
quested.
Now, if these Government banks, the depositaries of the
public revenue, will not pay specie for the very warrants
drawn upon them by the Treasury, the Government of
the United States from that moment ceases to pay specie
to the citizens of the United States. As, moreover, the
Government receives for duties only specie, and the notes
of specie paying banks, the instant its own deposit banks
cease to pay specie, the Government must refuse to re-
ceive the notes of its own deposits banks, and can receive
no notes except those of banks not deposit banks. On the one
hand, than, the Government is bound to pily its debts in specie,
and it has no means of procuring specie except from the banks
not connected with the Treasury, so that these banks find all
their notes collected and paid into the Treasury for duties,
converted immediately into specie for the use of the Go-
vernment, while the deposit banks will not pay their debts
to the other banks in specie, nor pay the warrants in spe-
cie. Take for instance this example. The claimant under
the French indemnity had certain moneys due to him in
France. The Government imported it in gold for him ;
and when the day of distribution arrived, he obtained an
order for his portion. But instead of receiving his own
share of his own proper identical gold, he has received
neither gold nor silver, but the notes of the deposit banks,
which very notes the Government itself would refuse to re-
ceive from this very claimant, for any debt which he might
owe to the Government. So long, therefore, as the Go-
vernment and the Government Banks will not pay specie
to other banks, it would be rashness in :those banks to pay
specie to them ; and as they cannot make a discrimination
in those whom they will pay, the only alternative is to con-
cur with the Government banks in the general suspension.
Our Philadelphia banks saw this. They thought it useless
to carry on so unequal an intercourse, in which they were
to pay to New York, while New York refused to pay to
Pennsylvania, for, if the Pennsylvania banks paid while
those of New York did not, the whole revenue would have
been turned into Pennsylvania notes, and specie demanded.
In the midst of these disorders the Bank of the United
States occupies a peculiar position, and has special duties.
Had it consulted merely its own strength, it would have
continued its payments without reserve ; but,
Ist. Like all the other Pennsylvania banks, it owed a
duty to the citizens of our own State, and it was not dis-
posed to stand aloof from a general movement of the other
State institutions, which, however it might regret, it could
not censure.

2d. It was not inclined, however, to discredit, by a re-
fusal to receive it, the paper of the State banks, which had
ceased to pay specie, still less to force its Pennsylvania
debtors to pay their debts in specie, when other citizens in
other States were allowed to pay in a less costly medium ;
thus breaking down, for the benefit of other States, the
merchants, and manufacturers, and mechanics of Pennsyl-
vania.

3d. While the vaults of the other Banks were closed,
the GOvernment of the United States would have no re-
source to procure specie, but the Bank of the United States,
which ought not to assume the risk of being the only
source of supply for bullion, to the Government and the
land offices, as well as for exportation.

The deposit banks of the Government would not pay
their debts to the Bank of the United States. Why then
should the Bank of the United States pay to these insti-
tutions, on account of the Government, specie for their
notes, when these very banks would not pay their own
debts ? There would have been an equal want of recipro-
city and of justice in such a proceeding.
sth. There was another reason against it, final and deci-
sive. From the moment that the deposit banks of New
York failed to comply with their engagements, it was mani-
fest that all the other deposit banks must do the same, that
there mutt he a anivarual Qucpc,Pistion tlirnaghnat the coun-
try, and that the Treasury itself, in the midst of its nomi-
nal abundance, must be practically bankrupt.
In such a state of things the first consideration is, how
to escape from it—how to provide at the earliest practicable
moment to change a condition which should not be to-
lerated beyond the necessity which commanded it. The
old associations, the extensive connections, the esta-
blished credit, the large capital of the Bank of the United
States, render it the natural rollying point of the country
for the resumption of specie payments. It seemed wiser,
therefore, not to waste its strength in a struggle which
might be doubtful, while the Executive persevered in
its present policy, but to husband all its resources so
as to profit by the first favourable moment, to take the lead
in the resumption of specie payments. Accordingly the
Bank of the United States assumes that position. From
this moment its efforts will be to keep itself strong, and
make itself stronger—always prepared and anxious to as-
sist in recalling the currency of the exchanges of the coun-
try to the point from which they have fallen. It will co-
operate cordially and zealously with the Government, with
the Government banks, and with all the other banks, and
with any other influences which can aid in that object. In
the mean time, two great duties devolve on the banks and
the country.
The first regards foreign nations, the second our own.
We owe a debt to foreigners, by no means large for our
resources, but disproportioned to our present means of pay-
ment. We must take care that this late measure shall not
seem to be an effort to avoid the payment of our honest
debts to them. We have worn, eaten, and drunk the pro-
duce of their industry ; too much of all, perhaps, but that
is our fault, not theirs. We may take less, hereafter, but
the country is dishonoured unless we discharge that debt to
the uttermost farthing.
The second duty is to ourselves. We should bear con-
stantly in mind that the step which has been taken is excu-
sable only on the ground of an overruling necessity. We
must not make the remedy itself a disease. It must not be
the pretext of extravagant loans or issues. These are already
sufficiently inflated, and if we have voluntarily removed
the most familiar and established check upon all issues—
their immediate convertibility into, coin—it is our duty , to
substitute some effectual restraints, which may enable us
to restore the currency without delay or difficulty to a safe
and wholesome condition. The result of the whole is that

•
greai, d:,aster has b^fallen the country. Its existeueo
thus far is only a misfortune, its continuance will be a re-
proach, from which all true men must rally to save her. We
must try to render it as short as possible, waiting patiently
and calmly for the action of the Government, and in the
meantime diminishing its dangers by great prudence and
forbearance. For myself, you know how zealously I have
laboured to avert this misfortune. With not less anxiety
I shall now strive to repair it.
With great respect and regard, yours,
Hon. J. Q. Adams, Quincy, Mass. N. BIDDLE;