The Madisonian. [volume] (Washington City [i.e. Washington, D.C.]) 1837-1845, 1838-02-20

to any great cxtenL ~ hlust NOT DC tofs0tten
that the charters Of oil the state Banks fix a
general limit beyond which they IRE not per-
mittod TO extend their discounts, That limit
Is. believe, ordinarily twice, or twice and a
hall, the amount OF their capitals paid in. As
the public deposites, under The measure pro-
pose, would be confined TO twenty-five banks,
il is evident that they could not be used, TO
any great extent, (relatiselyto their amount,)
by those banks 10 enlarge their discounts, be-
fore they would encounter an impossible bar
rier in the limit Of their charters. Ibis, il is
well known, occurred in several cases, (par-
ticularly in New York; under the operation of
the banks then employed as repositories; and
in those cases, authority was gwen to the
banks which had thus exhausted their charter
ed power of discounting on the public depo-
sites, to turn over the surplus, on which they
could no longer discount under The limitations
Of their charters, TO other banks, that they
might discount upon them. To any arrange
ment of this sort for extending bank discounts
on the public deposites. the measure have
submitted would oppose an insuperable obsta-
Gle, as it infexibly fixes, under all circum-
stances whatever, the number of banks to be
employed as repositories Of the public mo-
news and in fixing that number at twenty
fiye, the sautary charter limitation upon the
power Of discounting, would, as have just
shown, soon be brought into action TO prevent
excess by them.
think, therefore, Mr.. President, that under
the provisions of tho Substitute have pro-
posed for the consideration of the Senate,
there would be no danger Of any unreasonable
extension of discounts on the public depositcs.
know, however, there are gentlemen Of great
intelligence and patriotism, who are for any abb
so'ute prohibition of the banks dscounting, to
any extent, however moderate, on the public
deposites, and who favor, as the means Of car
rying out that prohibition, system Of special
deposites. The high respect / entertain for
the opinions Of those gentlemen has induced
me TO consider their suggestion, with more
than ordinary anxiety to come to the same
conclusions but after thorough examination
and reflection, according to the best lights of
my understanding, am satisfied that no sys-
TEN of special deposites, however specious
in theory, could be worked out in practice,
without involving consequences which they
themselves, Tor at least, large majority of
them would promptly repudia,e. In the first
place, it is demonstrate, humbly conceive,
that any system of special depostes, to be
practical and efficient, must lead to collec-
ton Of the revenue, directly or indireciiy, in
specie; and this they oppose as earnestly as
do. The Government must always hold itself
ready to pay its creditors in the ia,cful erren-
ey Of the country, IL demanded. This the
banks are bound to do, on behalf Of the Co
vernment, under the general deposite system.
But if you adopt the special deposite system
and collect the revenue, at the same time, in
bank notes, the banks would be bound TO pay
out to the public creditor only the identical
notes deposited with them; for this is the fun
damental and immutabie idea of special de-
poste. How, then, would such q system
icork7 The public creditor would present his
warrant to deposite bank--the bank would
offer him, in payment, first this note and then
that, which had been specially deposited with
it: but none of these notes suiting the conve-
nience Of the creditor, and the bank being
bound to pay no other, the public claimant
would go unpaid, and the engagements of the
Government be dishonored. To avoid the
danger Of such result, the Government, if it
adopted system of special depostes, would
be driven, of necessity, to collection of the
revenue in gold and silver; or, otherwise re-
ceiving the notes of specie-paying banks pro
forma, collect the specie for them from the
banks by which they were issued, and place
that specie on special deposite. But where
would be the difference, in the practical effects
on the banks and the business and interests Of
the community connected with them, between
collecting the revenue, in the first instance, in
gold and silver, and collecting il in the notes
of specie-paying banks, to be converted into
gold and silver by demand upon the banks
The honorable Senator from New York Mr..
Wrigh.) expressed the opinion, that the latter
mode OF operation would be the harshest and
when it is considered that this periodical con-
version OF bank notes would be in large masses,
and attended, consequently, with periodical
and distressing contractions Of the currency,
cannot but agree with him. At all events,
there are but these two modes of working out
special deposite system an practice, and neither
the one nor the other, il seems TO me, can be
made acceptable TO those who oppose the
Sub-treasury scheme, on account Of its tend
ency to create two currenclcs in the country
gold and silver for the Goyernment--poper
for the people.
There are subsidiary objections to this
special depositc system, which, although not
Of so much weight as that which have just
stated, cannot be overlooked in Just and
comprehensive estimate of il. If you adopt
1t, you renounce, at once, all means of engag-
ing the interests and enlisting the cooperation
OF the banks to carry out any Of those reforms
In the paper currency, which have heretofore
been 50 favorite an object of the policy of the
country. You must also pay them, and pay
them, too, no inconsiderable sum for their
services to the Government, and thus abandon
one Of the strong grounds (that Of economy,)
on which bank agency has heretofore been
preferred to individual agency, in conducting
the onorations nc tho Tro,s,,r,,