The Madisonian. [volume] (Washington City [i.e. Washington, D.C.]) 1837-1845, 1838-08-22

will not 90 az length into the causes which pro-
inability ofhe debtors 10 pay the banks for have
shown, that could the banks have collected In their
dues they could have fulfilled all their engagements.
Then what disenabed these debtors TO the banksi
The demand Tor specie was caused, lst.-By the
continuance of the Specie Circular, the effect OF
which upon The banks has been noted 2d.-The
demand Of payment in specie OF the balance OF our
foreign debt Exchange on England was against
as We were indebted 10 her, and she insisted on
specie. Our commercial debt 10 her was, eslimat-
ed by the Secretary OF the Treasury thirty millions
Of dollars. The Bank OF England and the Lond.n
bankers on account Of the large amount OF specie
raised there, on American credits, and brought TO
this country, became alarmed, and they not only
fused further TO honor bills drawn on them, but
called upon us for the balance due them TO be paid
In specie. Two-thirds Of the debt could and would
have been paid In great staple production cotton
had not the price of il about the same period at
which these balances were demanded OF US, expe-
TeDced an unexpected and ruinous decline. The
Secretary estimates the loss on cotton by this fall at
no less than twenty millions OF dollaTsl This den
cit could only be supplied by specie. The foreign
balance was much augmented in consequence Of the
heavy importations OF bread sufs owing short
ness of our crops.
The manner in which the distribution law was
executed, was another cause. About 40O00,000 of
dollars, were TO be distributed among the States The
Secretary did not pursue as he should have pursued
the usual businesslike, mercantile course of pro-
ceedng, by sending drafts the Deposite Banks for
the quota going TO the respective States, and which
would have been honored in the ordinary course u
mercantile exchange. The Acs which were passed
June, 1886, gave till lsi January thereafter for the
commencement of the operation Of the Jaw. Thus
The Deposie Banks had timely notice. But the
Secretary, In short time after the passage Of this
Act directed transfers TO be made al short dates and
In large amounts, about 10000 600 OF dollars; thus
taking SO much from the business employ ment Of
the country from The period Of transfer till the time
of distribution, and thus made demand for specie
/ all H.
New York Banks, which had in deposite some 10
600 600 of dollars.
The banks, in suspending, yielded to necessity
They acted from pure motives. They have saved
themselves and the people from utter ruin.
The only answer to the inquiry Why abolish the
Stale Bank depose system Isl the banks have been
guilty Of suspension and over issues lhave shown,
that so far from being guilty Of any thing wrong or
criminal in suspending, they performed high and
imperative duty 10 themselves and 10 the country
And now, to the second charge-over-issuing.
That there was an error 10 some extent in this is
admued-bu who is in fault Had the banks been
left 10 pursue their own course unin1nenced by GO
vernmental directions, and uninsiructed by execu-
tive mandate, no excess Of paper money would have
been committed. II never was in the view Of any
enlightened statesman, that the surplus funds Of the
government in the deposite banks should be hoard
ed locked up or 10 use the term OF Gen. Jackson,
annihilated" from the circulation Of the country
The following is an extract from President Jack
sons Cabinet opinion, Sept. 1888
The funds OF the Government will not be snnhilated
by being transferred 90 the State Banks) They will
Immediately be used for the benet Of TRADE, and if
tile Bank Of the United States curts its loans the State
Banks strengthened by the public deposites, will EX-
TEND theirs. What comes in through one bank will
60 out through others, and the equilibrium will be pre-
| served.
Gen Jackson took the correct view Of the subject
Why should not the banks discount 70 fair and
prudent extent the strength Of the government de-
posites, those of individuals, which every one
comedies is legitimate banking capital2 There
we're in the banks Of the country at the time of the
suspension, some $50 millions Of private deposies
As well might these have been locked up and !" an
| initiated, as The government funds. The banks
have object 10 over-issue, in virtue of these
deposites. Credit 10 them Is every thing; without
il they can do nothing. What inducement can they
have to blast their reputation by issuing their paper
in excessive quantities. None. Had not the stmu-
lus of executive direction been given them, they
would not have been obnoxious to the charge Of over
issues Let us see 10 what extent the executive in
terfered, TO give impetus 10 their issues The fol-
lowing letter will show, being circular 10 the De-
pose Banks.
Treasury DEPARTMENT Sept &C. 1888.
Sir-The Girard Bank has been selected by this de-
pareh the depository of the public money collected
in Philadelphia and its vicinity, and the Collector at
Philadelphia will hand you the form Of pro-
posed TO be executed, with copy Of his instructions
from this department.
In selecting your institution ofthe fiscal agents
Of the Government, only reply its solldy and
established character, afordng sufficient guarantee
for the safety Of the public money entrusted to its keep
ing, but conde also in its adoption adopt the most
liberal which circumstances will admit towards
moneyed institutions generally, and particularly to
those in the city Of Philadelphia
The depostes Of the public money will enable you TO
afford increased facilities commerce, and extend
your accommodation TO individuals And the duties
which payable TO the government arise from the bu-
sness and enterprise Of the merchants engaged in foreign
trade is but reasonable that they should be preferred
in the additional accommodation which the public depo-
sites will enable your institution give, whenever il
can be done without injustice to The claims Of other
classes the community
am, very respectfully,
Your obedient servant,
r. b. TANEY,
Secretary Of the Treasury.