The Madisonian. [volume] (Washington City [i.e. Washington, D.C.]) 1837-1845, 1838-01-11
To he Editor Of he Madisoniau.


To he Editor Of he Madisonian
Afier reading the able essays Of your correspoD-
dent Vaerius Publius, clearly and forcibly show
ing the absurdity Of The Sub-Treasury scheme and
that of Special depose In banks as first proposed,
did not intend trouble you again. but as il is now
proposed 10 make compromise upon the latter,
amended in manner, supposed 10 doaway its cbjec-
tionabe feature shall endeavor TO show that prae-
ticaliy il is no better than before.
| his, however, proper for me to state, that consi.
dering the treatment the deposite banks have receiy
ed from the Treasury department, the hostile ati-
ude it sill maintains, and the prejudces that have
been raised against them by the continual attacks Of
politicians, have, at time, believed that any Of
the strong banks could now be induced 10 PIT them
selves again into the power Of the government, by
taking large amounts of its deposites either gene
raj or special, on any terms il would offer. II the
Secretary should extend his inquiries through the
banks generally, think, he would ascertain this
fact
As now understand the system Of special deposite
in banks, it is proposed 10 receive the government
dues in specie or notes of such speciepaying banks
the deposte bank acting as the fiscal agent of the
government is willing pass to the credit Of the 60
vernment cash. Now, if the bank credits these
notes cash. il guarantees and assumes TO pay specie
for them, ifrequired, and no prudent bank would do
this, unless Immediately converted them into the
same currency it was bound TO pay, or received
compensation in some shape for the risk in holding
them however small that risk might be considered.
also understand one of the principal advantages
of system of special over general deposes to be,
that banks loan 10 The people the surplus funds,
and that they would always be available in general
suspension Of specie payments
think this is mistake, and will suppose New
York bank with 100000 capital, could be induc-
ed t. take the agency, might tno payout on govern
ment drafts all notes erceptis otcm suffering them to
accumulate in the government chest TO the amount Of
say 50 900, which viii suppose 10 be the lowest
amount Of Its deposites any time2 The directors
knowing that this amount was snugly packed away
in the government strong box at one end of their
counter not 10 be used BIZ the people, would be very
likely 10 loan out Of their strong box at the other
end TO the same people, an equal amount on the
strength of this, as on so much circulation. The
amount of bank notes received over this would be
converted into specie. Now, if this would be the
operation of the system and would il not be the in
terest Of the bank to make it So in what particular is
il better than at first proposed And how would this
special deposite of 600 600 Of deposie bank notes
be more available in general suspension Of specie
payments7 But / will suppose this indirect use OF
- 000, 600 would induce the depose bank to agree
to hold on TO the excess of bank notes till wanted for
disbursement, the strongest or most favored bank,
whose notes were packed away, could always know
the amount and presume 10 discount for the people on
the strength Of it as so much circulation. Or
even suppose the other banks not permitted to
know what amount of their notes were held in depo-
site they could estimate from their increase of issues,
near enough to enlarge their discounts to the amount
To conclude, / do not think any system Of special
deposites be devised short Of using specie ereli-
siUely, by which is possible to prevent ne people
using the surplus funds directly indirectly and
believe that deposites of bank notes not converted
into specie whether general or special discounsriH
be made by the bank issuing them on so much cir
culaton, and that any special deposite system will
practically require erensrc specie receipts and pay
mcnts, unless the government pays in some shape for
the risk of holding bank notes till disbursed or takes
such risk upon itself Ifihe government expects to
aid in restoring the finances ofhe country sound
| and healthy condition, it must manage its own IN
much the same manner as prudent individuals and
such would not trust their fundsscaered throughout
the Union, in ten thousand hands, longer than to
collect and depose in more secure places, and they
are usually more vigilant in watching over their in
erests than public officers, over those Of the govern
ment. BANKER