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

the balance now IS S37 ,OOOsVUu Hess IMAM III
| 1919, yet it is sufficiently large 10 render
heaoy reduction in bank loans and circulation,
necessary to meet it--because exchanges, be-
ing materially reduced, ia could BE- mel IA mo-
| thing Jut specie. The heavy importaiions OF
specie from England, through the instrument
| tally of accepiances Of American drafts,
alarmed the Bank Of England for its own safe
Nv and 10 counterfeit this drain, it refused
10 discount for any merchant who accepted
American bills, thus making it necessary TO
demand more specie for the payment OF the
| foreign debt, than would otherwise have been
required. This policy was more rigdly pur-
sued than perhaps it otherwise would have
been, had il not been supposed from the de-
clarations OF great portion OF the American
press, that it was part Of the policy OF our
Government to prevent the expectation Of sPe-
Gle entirely, and continue, as far as possible.
the drain from Europe. Combined with these
causes, was The execution OF the Deposite
Act Of June, 1885,
| Ii having been ascertained from the rapid
increase Of the revenue from the sales OF the
| public lands, and the duties on foreign impor-
| tatons, that there would be a large surplus IN
the Treasury on the LIST Of January, 1897, 1t
was determined to Withdraw it from the con-
troll Of the Federal Government, Ito which lis
possession offered so MANY strong and DANCE
rous tempiaiions,) and from the custody OF
the deposiie banks, to prevent its being made
the foundation of dangerous and excessive
issues of bank paper and to place it in the
custody Of the State Governments, thus to re-
main to be employed for the local benefit Of
the people, from where it had been unconsti-
| Yam na
for the legitimate purposes oil the Govern
ment, disposition, in my humble opinion,
both wise and salutary, both as regards the
currency and the purity OF the Government
For the purposes of giving the banks timely
notice, and to enable them to meet the de-
mands ofthis law without detriment to them
selves or the public, the operation Of the act
was not to commence until the LIST day Of
January after its passage, period OF SIX
months, and then 10 be met in four equal quar-
terly instalments. This was ample time to
prevent any serious arrangement of the af-
fairs of the banks, or the commerce Of the
country. In a short time after the passage
OF this act, and long before it was ascertaiHed
what would be the amount to be distributed,
and of course the first instalment, the Sc
cretary Of the Treasury issued his orders to
the deposite banks, directing them, by a fixed
period, to transfer to specified points, about
Sl3,000,O0O, las well as recollect,) instead
of giuing drafts to the States for their several
quotas on the most Convenient banks, TO pay the
amount on The day IL ,oas due; which might
have been met, according to the usual mode
of commercial exchange between creditor and
debtor banks, and merchants and by which
they would have been performing but the usual
commercial functions whereas, by the opera
tion Of the orders Of the Treasury Department,
the amount to be transferred, Was distracted
from commercial employment, from the time Of
the transfer till the payment; and created a
demand, in some instances, for specie, which
mi ght have been avoided. Thus was inaict-
ed upon commerce an injury from the injudi-
cious execution of the laio, which is dexter
iously ascribed to the provisions of the law it.
self! This operation was particularly severe
upon the New York Banks, which held in the
neighborhood of $20,000,000 Of the public
dep0sites. The deposite act in itself did not
necessarily decrease, or tend to decrease, the
active capital Of the country; it was taken
from banks to be again put into banks. While
it reduced the active means Of some, it in
creased that Of others. In many instances
the credit was only passed from the Federal
to the State Governments. There was no.
thing in it to embarrass the trade and commerce
of the country. The effect was produced by
its unwise execution, coming in aid Of other
causes of an embarrassing character. In this
opinion am sustained by the most able and
skilful financiers OF the country.
AT about the time Of the suspension of spe-
Gle payments, there were in the banks, (if my
estimate be correctly about S j So, 100000 of
private deposites. These private deposites
were generally made in bank notes yet the
depositors had the right to demand specie for
them. When the operation Of these causes
were perceived, and the diminuton of conf
dence on the part Of the Government mani
fest, the private depositers, in place Of their
deposited notes, began to demand specie.
Brokers also began to demand specie for all
the notes which they held, or could purchase,
and this was no small amount.
The banks in the city of New York, where
the storm first began to rage and to produce
most serious effects, although ultimately res
ponsbe for all their obligations, could not
meet this sudden rush upon their vaults with
out ruin to themselves and the people; they
therefore suspended specie payments. This
suspension, the causes Of which were not
understood by the country, produced alarm
throughout the whole community; and gene
raj suspension Of specie payments was the re-
suit. By this suspension ] do'not doubt that
the banks have not only saved themselves but
the country from utter ruin and destruction.
confidently believe that the withdrawal OF
the confidence ofthe Government, so strength
ened the operation Of all the causes to which
Il i hnv aly TAD haiti I'D hnuE
to course, which with the fostering care and
continued confidence Of the Government,
could and would have been avoided: for the