The Madisonian. [volume] (Washington City [i.e. Washington, D.C.]) 1837-1845, 1838-05-22

state OF things you have described lanu iuy 'oo 40
existing at this period. This whole blame ana re-
sponsbity must fall upon the Secretary OF Inc ifea
sury.
In less than twenty days afer the passage OF The
deposile act the specie circular was issued
Under these two acts Of the Legislature and the
Executive new era was opened
have said in the former part OF this paper, thai
would show that the circumstances that called for
the issuing OF the specie circular, ought never TO
have existed, and upon them il could be defended.
That now proceed 10 do
Had the Secretary Of the Treasury acquiesced in
the request made In the latter part Of the year 1885,
BY some OF the banks, to which have already re-
ferred to collect portion Of the balances due from
other banks in specie, accumulated against them by
the public revenue; II would have efectualy check
ed their disposition, then operating, wildly to extend
their business and it would have repressed the mad
spirit then raging for speculation As have shown,
he pursued an opposite course. He not only sIimu-
lated an increase of bank credits for which the pub
domain was rapidly passing off in exchange but he
permitted II to be exchanged for indiridual credits,
without inerposing 10 prevent it. that can find any
evidence of This assertion do not make ligh'.
refer to report Of the Secretary for the proof In
House document, No 297, of the present session OF
u
to examine the Land Office, at Helena, A. T., dated
the 2srh November, 1885, he states the whole amount
of money in the hands Of the Receiver be $4,000
Ofthis sum $4,000 was in bank notes--and The ba-
lance in certificates OF deposite in banks-bank
checks drawn by other and on most distant banks
individual checks on banks, and checks Of indiyi-
duals drawn on individuals In this same docu-
ment, among the funds found by the agent appoint
4 he of,ca of he n
Wayne Indiana, in Augus5sls36, there appears
drafts, drawn by individuals on New York, Michi
gan, Ohio, Metropolis Bank, and Indiana Banks
To my own knowledge, similar transactions took
place at many other Offices of the public Receivers
This character of Of acquiring possession Of
the public lands having been silently sanctioned by
the Secretary Of the Treasury, together with the
facility with which bank credits were to be obtained
by those who chose to avail themselves Of them in
the stimulus to the banks 10 grant them the
public moneys proceeding from the Treasury De-
partment, as have shown, fully warranted; nay
imperaively demanded the interference Of the Exc
cuve to put final sop to the one, and to check the
other of those modes of procedure. For these rea-
sons have maintained that the specie circular
was justified and ought to be defended.
now return to the deposile bank bill after the pas
sage Of the act of June, 1886.
After the passage of that act and the issuing oflhe
specie circular, your report states,
Time passed on, however, and Congress met
and adjourned again, and no law was passed affect
ing the collection ofthe revenue in any OF its branch
es. The order had had the effect to diminish to
some extent but to much less extent than was anti.
cpated by its friends and predicted by its opponents
the sales Of the public lands and to lessen, in the
same proportion the accumulation of revenue from
that source BY this time also, unequivoca eviden-
nf h,St nnI al t1pt
exhibiting themselves not only throughout this
country, but most of the commercial countries of
Europe, and SO rapidly did the change sweep that
before the expiration of the month of May, 1887,
with few unimportant exceptions, all the banking
institutions of the United States were induced to
suspend the payment Of their notes in specie"
The most important part connected with the act of
June 1885, and which had more to doin concentrating
the catastrophe Of May 1887 in my opinion than any
thing else you have passed over in utter silence and
without notice. mean the manner in which that
act operated and was executed. On former occa-
sion explained both of those in detail in letters ad
dressed to the President under date of the 18th and
l7th of November last and published in the Madiso-
man. shall not, therefore, enter into SO minute
detail now.
AT the period of the passage of the act Of June,
every thing was in state of wild and feverish ac-
ton" and as have shown, all the SURPRISES OF pub
lie money in the hands of the banks had been loaned
out first so far as the cupidy of those who managed
the Banks tempted them to d. So; and then stimulat
ed still further on BY the Secretary of the Treasury
in the suggestions, advice, and directions given by
him. After the passage Of that act you remark
Sill tie unnatural acenmuations Of rerenm conti-
s,nsd in a manner to alarm the minds of all and TO
furnish the most conclusive epidence OF fearful c1cesses
only in banking and in tie use Of credits generally"
now first, refer to the deposite act, in which are
TO be found three features that were calculated
inevitably to aggravate rather than to mitigate the
evils you have so wildly pictured as existing at the
time it adopted, and that continued to exist alter
wards They are as follows: Fira. !" The Secre-
tary of the Treasury shall not allow to remain IN any
deposite bank an amount Of the public moneys more
than equal to hreefourhs of the amount of its capt.
tai stock actually paid in for longer time than may
enable him to make the transfers" Under this part
of the act the many millions which the Banks had
loaned out beyond the amount of three-four'hs OF
their capital it became necessary should be immedi-
ately called in. Second The enormous transfers OF
the public money called for under the provisions OF
the bill and in carrying il into execution Inc Ere
sdent in his annual message in December, 1880, re-
ferredto the extraordinary sums OF money that had
been transferred by the depostc banks of which, ne
stated to have been paid during the year ending the
LIST of October 1885, amounted to 1888, s9f-and
the amount transferred and paid between the Isl of
October and the 9th dav of November, $1,000 600
and the amount Of transfer warrants outstanding at
that date was $l4 450,o0o; making an aggregate OF
$50 lG8, S9i Third, Under this act the banks were
requircdto pay interest all sums in their hands
exceeding one-fourih part oftheir capital stock The
old deposite banks obliged to keep the public
moneys in their hands loaned out and the newly Sc