The Madisonian. [volume] (Washington City [i.e. Washington, D.C.]) 1837-1845, 1837-10-05

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only Lend Office money, every BODY wanted gold
and silver. This necessarily gave rise 10 extensive
demands upon The banks, in thai portion OF the
Union for specie, which they provided Tor by draw
ing large supplies from the east But this was not
all. All persons engrating TO the west, whether
hey intended To buy public lands OF not fell IL ne
cessaIy 10 provide themselves with LaHd once mo-
ney the general and standard currency 81 the coun-
try TO which they were going. The ordinary pre-
paration for removal, was first TO convert all The
bank notes held by them into gold and silver This,
know, has been extensively the ease IN virginia, Tor
many Of my friends and neighbors have recently
migrated TO the west, and in every case they have
gone TO the banks, whose paper they held, to ex-
change il for specie. The same thing has, doubt
less occurred in every portion OF the Union, whence
emigrations have taken place 10 the west have
been informed particularly that Il was SO In the
northern and eastern siates-that great hive which
has poured forth SO many swarms Of useful and en-
terprsing citizens TO people and subdue The western
forest Gentlemen, who represent those states here,
can correct me, IL my information has been erro-
neous These multiplied and extensive calls for
specie, resulting from the direct and indirect opera
ton of the Treasury order, must have produced
very serious pressure upon the banks throughout
the country, bu especially in the Atlantic states. IL
was a sudden and unnatural displacement OF the
precious metals, which could not fail 10 give VIC
lent shock To the whole system Of bank credit found
ed upon them. But whenthe government announced
its final determination 10 continue this specie circu-
lar the permanent policy Of the country the blow
was decisive and fatal. In the permanent and in
discriminate refusal of the notes of all banks In the
largest branch of the public revenue an official dis
credit was stamped by the government upon bank
paper which, in the critical state 10 which II had al
ready been brought by the circular 1t could not sur
vive. Public confidence was shaken, distrust and
panic were produced, systematic runs upon the
banks commenced, under which, whatever their Ill
tmaie ability, they forced to succumb for the
time.
I know, sir, that this catastrophe has been
sometimes in particular quarters, attributed to the
transfers Of public money under the deposite act.
But If the specie circular had not been issued and
that act had been executed in the spirit Of the
policy which shaped its provisions no sensible en-
barrassment could have resulted from il TO the
banks. The act itself was measure Of wise
and necessary policy. II grew out of a state OF
things which presented these three alternatives:
An immense surplus of near forty millions Of
public revenue was to be continued in the Depo-
site Banks, and used by them in ministering
TO reckless spirit of speculation, at the hazard OF
the ultimate loss of the whole fund TO the Govern
ment as well as of great injury to the community
Or secondly, ii to be wasted in projects Of go
vernment expenditure, which Were not merely use
less but highly dangerous and pernicious Or lastly,
il to be laid by, in raeabe proportions, with the
several States as temporary and unquestionably safe
repositories with the privilege OF using II, till called
for by the wants of the nation, in such manner as
they should think best for the benefit of their respec
tive communities | think, sir there are but few
candid and patriotic minds which, looking back TO
the state of things which then existed will not at
once decide that the last aernative-that which was
embraced by the bill-was the one most proper to be
adopted. Al the same time, its provisions were OF
the most liberal and considerate character in regard
to the banks, from which these moneys were to be
drawn The whole payment was divided into four
equal insalmens the first not TO be paid over by the
banks till after six months notice given by the act
ITSELF and the three remaining nstalmenis TO be paid
al successive periods Of three, six and nine months
thereafter. Ample time was thus afforded TO the
banks to meet these payments; and there is reason TO
believe that, upon judieous plan Of execution, the
greater part if not the whole of the necessary trans
fers might have been made through the trade and
commercial exchanges of the country, not only with
out Inconvenience, but with real accommodation to
TO the business of the community. A fundamental
principle of the act the six months notice given
to the banks before the commencement OF its execu-
ton But, instead this anticipated transfers to the
amount OF ten fifteen millions (unless ! am erro-
neously informed,) were made, and without any
known necessity for them, very soon after the pas
sage Of the act In the execution of the law also,
it is said that large amounts of specie were drawn,
and transported to and fro to the great disturbance OF
commerce, when the same movement OF funds might
have been effected with ease, through the customary
channels of trade, without displacing dollar. !
have heard for example, of case in which bill OF
exchange had been declined and considerable sum
drawn and transported, in specie when almost as
soon the specie arrived at its destination the bill
OF exchange overlook it, and brought or its equiya-
lent back again to its original point Of departure II
is not my purpose, sir to enter into any detailed ex
animation of the mode in which the deposite act has
been executed; but refer to these circumstances to
show that, il Inconvenience and embarrassment, to
any serious extent have really attended its operation
there is ground al least for the inquiry, whether the
fault has been in the law, or in the administration
of the law" am far from imputing any thing will
fully wrong To the Secretary Of the Treasury; but
am well satisfied, that the Inconvenience, which
have been felt night have been avoided by differ
ent execution of the laws.
If am not mistaken, Mr. President, in this re-
view of the circumstances which have mainly con-
trbuted to the recent suspension of specie payments
by the banks here, have shown that suspension to
be the result Of causes which not likely to occur
or may be guarded against in future Our late ex-
perience will, | think, efectually admonish us
against another surplus revenue, which has been the
chief source OF the arrangement in our monetary con-
Germs and in this respect, am happy TO perceive,
that the President gives us the assurance OF cor
dial concurrence of views, on his part. Neither
shall we, trust, again do violence to the natural
laws of trade by forcing large quantities OF gold and
silver into the country in the vain hope of extending
their circulation, before any opening is made for
them by suppression of the smaller bank notes, but
with the real effect Of stimulating and expanding the
paper system; and If we may judge of the opinions
of future Congresses by the almost unanimous sense
of the last shall not again be exposed to the dis
turbing operations of specie circular. The sus-
pension OF specie payments taking place under cir
cumstances so peculiar and anomalous, and so I'M
likely to occur, easy To be guarded against in
future, proves nothing in my estimation, against the
general expediency Of using the State Banks as is
cal agents of the Government But, if il were other
wise, is this The time would ask, TO withdraw the
countenance and support of the government from
them' would appeal to those political friends,
with whom have acted in steady and harmonious
opposition to the Bank of the United States, and ask
them if they have not seen the attitude assumed by
that institution Do they not recognize her control
ing influence in the late meeting of the banks of
Philadelphia in which it was resolved not TO join in
the measures proposed by the New York banks with
view to early resumption of specie payments
II is evident she does moi desire return TO specie
payments; and there is reason TO believe, from the
large extent of the commercial operations in which
she has been engaged, that, however much her
spectacle banks in the country prepared at this time
TO meet her liabilities All her power and influence