The Madisonian. [volume] (Washington City [i.e. Washington, D.C.]) 1837-1845, 1838-07-04

comparative losses from stale banks ira lhulVluuai
repositories. was known 10 the Secretary OF The
Treasury, (Mr. Woodbury. when he made his
supplemental report OF 1884 he had carefully com
pared them, and, upon his official responsibility,
stated 10 Congress that The balances were most de-
cidedy in favor Of the Stale bank repositories For
proof OF this assertion, refer 10 The report ITSELF
Now, sir, the whole amount OF defalcations on the
part OF the banks as repositories according to the
Secrearys own statement, was VI ,075y53 ~ since
reduced by payments and security, 10 1873, 129 45
and as debtors on account of their notes on hand,
$50 900 In a report transmitted BY Mr.. Woodbury.
10 this House on the 2Slh of February last find
the amount Of losses sustained by the Government
account Of banks, sweled 10 the enormous sum OF
65S0,000 without interest; and including interest,
to Is 600 000l!! this Is The statement: In answer
TO the first inquiry, as 10 the amount Of balances
against all banks which have been used as public
repositories that is not secured or will baby be
lost, adding thereto the estimated loss that has oc-
CURED, by taking on public account depreciated bank
notes." would observe that il Is computed those
balances SO lost will be about 81 600 600, and the
loss by taking such notes. about ", 500 600; making
in the aggregate, &c $50 600. This is without the
addition of any interest," as the subsequent state
ments. Ii interest was cast The above sums, the
aggregate would exceed $l3000,OOO." The Secre-
iarys estimate is that about 81 100000 will be lost
by banks as repositories and he . computes" the
probable loss from collectors and receivers" at
from 5000 900 TO 81 200 000 the loss Of the one is
estimated upon actual facts, the other upon mere con-
lecture. / feel confident that the Government would
profit by an insurance that the losses should not ex
coed 81 or 100000 This is comparison of loss
es as repositories: now let us compare losses 10 the
Government by banks and individuals, as mere
debtors The loss by banks, according 10 the report
of the Secretary from their unpaid notes Is 49,
IRON individuals on duty bonds alone, about So
100000 But here am met with the estimated loss
of about S5,50O000 from the depreciation OF bank
notes used by the Government in 1914, ZIG and
IT. Now, sir, the Secretary does not furnish us with
the name Of any bank, the amour, of depreciation on
any Of their notes, the amount OF notes used, or any
other data upon which his estimate is formed, and by
which il can be corrected In this state Of things,
might leave this conectural estimate OF the Secretary,
as not weighing feather in the arguments but there
are facts within the reach Of the House that will scat
ter this estimate to the winds. II will be seen that the
depreciation took place during and Immediately
succeeding the war, and the result Of that ca
lamy. The Government was moi compelled 10 re-
ceive single note of the banks in payment Of their
dues or on loan. But il did and why? Because it
had no money had exhausted its credit and with
full knowledge ofther depreciation, borrowed the
notes OF the banks TO enable II TO carry on the war.
The Government had resored TO the expedieni Of
certificates of loans and Treasury noies-and what
was their credit In letter addressed by Mr..
Munroe, late President of the United States to Sas
E. Burrows, on the Goth Of January, 1881. Speak
ing Of the condition of the currency, he says:
~ well remember however, that when was called
by the President to the Department Of War the 3lst
OF August, 1914 the Certificates Of the Treasury
evident that if reliance placed on the sale Of
certificates only that still further decline would
and that the worst consequences might be appre-
hepded.. The country was invaded through the whole
island and marame frontiers, and powerful s9uadrons
at the mouth Of every BAY and river leading to
principal cities which were threatened with attack and
ruin The metropolis of Union had been forced,
and public buildings destroyed. Such the state
Of the country and the funds, when entered the De-
partment Of War. Under such circumstances
appeal made 10 the patriotism and interest of the
cities, and banks within Them by the Department of
War; with the sanction Of the President, for loans Of
money necessary for their defence, for that of the
maritime frontier and the Union, For the first loan
that obtained million Of dollars from the city
Of New York, which took place few days after enter
ed the Department. no price fixed. As Treasury
notes selling for $50 in tie $780, that was claim
ed but not acceded it, twas left for subsequent
adjustment to be settled fair principles. Several
millions Of dollars were obtained from the District Of
Columbia, and principal cities throughout their Uuion,
and, according to my recollection, at par"
Connect this testimony Of Mr. Monroe with the
efforts OF Mr.. Dallas, by his Treasury orders Of
1914, to compel the banks to receive Treasury notes
at par, under pain of having their paper dscon-
tnued in the receipts of the public dues and the
evidence is conclusive that by using the notes of
local banks beyond their usual boundary Of circula.
ton, instead of certificates and Treasury notes, the
Government did not lose but gained, although the
notes Of the banks had on account of war, and the
destruction of commerce, somewhat deprecated but
did not generally depreciate twenty per cent Thus,
sir have the true secret OF that loss to the Go
vernment by the depreciation of bank notes, which
is now presented in fearful array to the prejudice of
the banks - II.
1t is most singular Mr. Chairman, that the Secre-
tary OF the Treasury, with full knowledge Of all
the losses sustained to the Government by the State
banks, either as repositories of the public money,
by the depreciation of their notes, after having most
satisfactorily in his report of 1884, exposed the true
causes of their losses, and successfully proved that
they were the result of the calamities Of war and
their patriotic efforts TO sustain the Government in
the arduous and doubtful struggle, in which it was
engaged should not only array these losses but bring
upthe depreciation OF their in Judgment against
them. After most ably indicating The State banks
against these identical charges in his report Of 1884
and proving most conc'usivey that there was nothing
in them TO impair confidence, and comparing the
State bank with every other system, the Secretary
concludes by saying:
II is gratifying to reflect however that the credit
given by Government, whether to BANK PAPER or BANK
AGENTS, has been accompanied by SMALLER LOSSES in
the experience under the system Of State banks in this
country at their WORST PERIODS and under their Sc
vEREsT cALAMITIEs, than OTHER KIND OF CREDIT
the Government has given in relation to It's pecu
mary transactions. Hence unless the States and the
United States, should both deem it proper gradually
and N the end entirely to dispense with the paper sys
TEN, and which event is not anticipated the Government
cannot escape occasional losses from that quarter and
can never hope TO escape oil losses from banks as fiscal
agents. except by the employment in their place Of other
and individual agents, who will probably, be found less
responsible, safe, convenient and economical"
This conclusion covers the whole ground and is a
decisive relutation of the Secretarys report of Feb
lHh, last To prove the deliberate and strict exam-
nation which brought the mind of the Secretary TO
thus conclusion, cite from the same report the fol-
lowing expression:
"Justce to the State banking institutions as body,
whose conduct in particular cases has certainly been
Objectionable, but whose injuries to the Government
have been almost incredibly exaggerated, and whose