The Sun.
London, England, 1845-12-23 00:00:00

RECOMMENDATION OF A GOVERNMENT
BANK.

By the constitution of the United States it is provided,
that " no money shall be drawn from the treasury but
in consequence of appropriations made by law." A.
public treasury was undoubtedly contemplated and in-
tended to be created, in which the public money should
be kept from the period of collection until needed for
the public use. In the collection and disbursement of
the public money no agencies have ever been employed
by lew, except such as were appointed by the Govern-
ment, directly responsible to it, and under its control.
The safe-keeping of public money should be confided to
z public treasury created by law, and under like respon-
sibility and control. It is not to be imagined that the
Vimers of the constitution could have intended that a
teeasury should be created as a place of deposit and safe-
keeping of the public money which was irresponsible to
the Government. The first Congress under the consti-
ttaion, by the Act of the 2d September, 1789, " to esta-
blish the treasury department," provided for the appoint-
ment of a treasurer, and made it his duty to " receive
and keep the moneys of the United States," and " at all
times to submit to the secretary of the treasury and the
comptroller, or either of them, the inspection of the
stoney in his hands."
That banks, national or state, could not have been
.atended to be used as a substitute for the treasury
epoken of in the constitution, as keepers of the public
money, is manifest from the fact, that at that time there
was no national bank, and but three or four state banks
of limited capital existed in the country. Their employ-
ment as depositories was at first resorted to, to a limited
extent, bUt with no avowed intention of continuing them
permanently, in place of the treasury of the constitu-
tion. When they were afterwards from time to time
employed, it was from motives of supposed convenience.
Our experience has shown that when banking corp.
vttions have been the keepers of the public money, and
beel thereby made in effect the treasury, the Govern-
:lsin can have no guaranty that it can command the
use of its own money for public purposes. The late
Batik of the United States proved to be faithless. But
a• few years ago, with millions of money in their
keeping, the Government was brought almost to
bankruptcy, and the public credit seriously impaired,
because of their inability or indisposition to pay, en
demand, to the public creditors, in the only cur-
rency recognised by the constitution. Their failure
occurred in a period of peace, and great inconvenience
and loss were suffered by the public from it. Had the
country been
involved in a foreign war, that incon-
venience and lees would have been much greater, and
:might have resulted in extreme public calamity. The
public money should not be mingled with the private
funds of banks or individuals, or be ased for private pur-
poses. When it is placed in banks for safe keeping, it is
in effect loaned to them without interest, and is loaned by
them upon interest to the borrowers from them. The
public money is converted into banking capital, and is
u:e -1 and loaned out for the private profit of bank stock.
holcie i
re ; and when called for (as was the case in 1837), it
ma be in the pockets of the borrowers from the banks,
instead of being in the public treasury contempt by
vonstitution. The framers of the constitution could
never have intended that the money paid into the trea-
sury should be thus converted to private use, and placed
beyond the cantrol of the Government.
.auuks which hold the public money are often tempted
by a desire of gain to exceed their loans, increase their
circulation. and thus stimulate, if not produce, a spirit
of speculation and extravagance, which, sooner or later,
must reerdt in ruin to thousands. If the public money be
Ilot,permitted to be thus used, but be kept in the treasury
nn' paid out to the public creditors in gold and silver,
the temptation afforded by its deposit with banks to an
tnadue expansion of their business would be checked,
while the amount of the constitutional currency left in
circulation would be enlarged by its employment in the
Fute;le collections and disbursements, and the banks
themselves would, in consequence,be found in a safer
lend sounaler condition.

At the present, state banks are employed as deposito-
ries, but without adequate regulation of law, whereby
the public money can be secured against the casualties
and excesses, revulsions, expansions, and defalcations, to
which, from over-issues, over-trading, an inordinate de-
sire for gain, or other causes, they are constantly ex-
posed. The Secretary of the Treasury has in all cases,
when it was practicable, taken collateral security for the
amount which they hold, by the pledge of stocks to the
United States, or such of the states as were in good
credit. Some of the deposit banks have given this de-
scription of security, and others have declined to do so.
Entertaining the opinion that " the separation of the
moneys of the Government from the banking institutions
is indispensable for the funds of the Government and the
rights of the people," I recommend to Congress that
provision be made by law for such separation, and that
a constitutional treasury be created for the safe-keeping
of the public money. The constitutional treasury re-
commended is designed as a secure depository for the
public money, without any power to make loans or
discounts, or to issue any paper whatever as a cur-
rency or eirculation. I cannot doubt that such a
treasury as was contemplated by the constitution
should be independent of all banking corporations. The
money of the people should be kept in the treasury of
the people created by law, and be kept in the custody of
agents of the people chosen by themselves, according to
the forms of the constitution ; agents who are directly
responsible to the Government, who are under adequate
bonds and oaths, and are subject to severe punishments
for any embezzlement, private use, or misapplication of
the public funds, or for any failure in other respects to
perform their duties. To say that the people or their
Government are incompetent, or not to be trusted with
the custody of their own money, in their own treasury,
provided by themselves, but must rely on the presidents,
cashiers, and stockholders of banking corporations, not
appointed by them, nor responsible to them, would be
to concede that they are incompetent of self-government.
In recommending the establishment of a constitutional
treasury, in which the public money shall be kept, I
desire that adequate provision be made by law for its
safety, and that all executive discretion or control over
it shall be removed, except such as may be necessary in
directing its disbursements in pursuance of appropriation
made by law.