The Madisonian. [volume] (Washington City [i.e. Washington, D.C.]) 1837-1845, 1839-03-30
: .FfsIms'iAs AiaSsma Stais iHtsasgsnes'
THE SUB-TREAsURY

with The following very abie is.s' 81 economists
most profound and distinguished Po ,s'.se nj one
10 the South ID member Of the 49,, - ,h snh
OF the Southern States, on the su.J r 10 80, us
treasury. The leu ., we deem y p.'p nnhIic,,,;on
not written with the remoess
us da'ed- FsBauAmY 0, 1888
Dsay Sir. Yours of the 4th insanI, was duly re-
cev.d 4 feel highly q q red by The terms 10 which
Won have asked my opinion on subject Wnich
Sn.asr ~ vial Importance, and which has already
soy,yed q, much OF The attenlion oil our most dis
,iauisbrd statesmen. Upon The great principle upon
winch that subject must b. seiii d, agree with
yourself and Mr.. kives. outsider what Is called
he sab ere asury scheme traught with the most
formidable evils. consider Il most decidedly at
with the civilization OF The age In which We live
as threatening the overthrow OF that great system OF
credit, which Is one OF the charac ering features OF
the nineteenth century. Il seems 10 me Ia be most
decided movement backwards towards The ages Of
bdrbirsn. l look al this question with the N re
s,liciiude, be,ause ] know that The people, whose
will ultimately decide The matler peculiar
" liable 10 take wrong views OF The whole subject;
the great mass Of mank nd judge BY appearances:
and the SPACIOUS remark OF David Hume Is strictly
true, tina, there is subjeci In the world in which
frs appearances are ofeneI false, Than in political
economy. Twill Be long lime before the people
will be Familiarity acquainted with the great subject
Of credit; and until they are, they will be liable TO
many abuses The system of credit with its mani
fold advantages is liable nevertheless occasional
commercial reyosions, which ever produce the most
rare, strike the imaginatioAs of men, and are re-
garded BY the unrefecting multitude as the charac
terising phenomena OF The system. Whenever they
take place, the people will always look ercinsirely
10 the prominent parts Of that systsm, and charge
the whole calamity upon them, although these may
be the mere exponenls and not the cause. Hence,
during the middle ages, whenever commercial dis
tress arose the poor jews, who were the great mo-
ney dealers Of Europe, were sure to go to The traH
In London, ill banks were established, Lombard
street, the great moneyed street. was made response
Bile. In the hard. money countries, they are the
Rothschilds, the Lafeties, and the Torlanias-ihe
great private bankers, who have 10 bear the sin Of
every commercial revulsion. In countries like
England and own, where the progress of civili-
cation has reared that great engine oil improvement
the credit sysien-and sustained and developed il
by the operation Of banking companies, the banks
must OF necessity become the most promine parts of
the system hence we are not TO wonder that with US
an indiscriminating tribunal should charge the
whole evil OF commercial revulsons upon the banks
When men cannot pay their debts, they are very apt
10 charge their ruin upon their creditors. In a
banking country, banks will OF course be the largest
creditors, and therefore will be charged with most
OF the SIN The popular clamor in our country
against all banks, since The late PRESSURE seems TO
me 10 be perfect illustration of this general re-
mark. few yearsago, when the credit system was
stretched to its extreme limits, andlhe country
ed TO be enjoying unparalleled prosperity, there
were those who could look on and stimulate the
banks TO yet greater expansions and the moment
superstructure was overthrow, could then come
forward and calmly rec Jmmend a total disconnec-
ton OF the government with them, because of the
mischief which the latter supposed to have pro-
duced. Now, the fact is that the rage for specua-
ton almost always precedes that for banking. The
effect is mistaken for the cause Ii is true however
thai the effect in time becomes powerfully operating
cause, as Is frequently the in political economy
Iooke, In his great work on high and low prices
has sh ,wn most conclusvely, that in almost every
case, OF what is called ovetrading the great pro-
relling cause In the first instance has been entirely
cItraasons 10 the banking system the operation OF
the latter being exerted and dervatively
do not pretend To deny but tn the banks may often
carry the spirit Of speculation farther than il would
Otherwise go; bat 10 caarge them with the whole
evil is most Unfair One Of the most terrible re-
vulsions in trade, which has occurred for the las,
fifty years, took place in Hamburg in 1893 where
there was MT single bank of circulation, nor a
single bank no passing from hand 10 hand
wherever the credit system Is erected, aud the trade
IS great and part OF II hazardous there you will have
occasional revulsons, banks no banks. Wherever
the trade Is between the merchant aud The farmer with
ltle Of that hazardous branch which may rea-
lize millions to-day and sink hem Tomorrow there you
have but few revnlsions in trade. whether you have
banks or not u there has been single failure ia
our little village. Is not because have no bank, but
because we are engaged trade altogether between
farmer and merchsm. Scotland had more banks than
any country 10 Europe, IN proporop to its population
and wealth; aud yet. where III the world shall you fad
greater stability the whole monetary systemi And
why Simply because The trad, Of Scotland is alto.
gether safe rade-trade on limited scale The
whole of Scotland exports only one fifth Of what is OK.
ported from the single city Of Liverpool You have re-
vulsons IN London, Liverpool. and New York. not be
cause Of the banks but because of the great and ucu
sng trade which they are carrying on. When the
stake great you must greater hazards -
hen you are playing for the great prizes in the lottery
you must expect to draw occasional blanks You have
u Is true, fewer revulsios France Spain italy, &c
inc hard money countries, than you have IN England and
the United States; but is not the difference owing to
the FACT that England and America have so far exceed
all their competitors in the great struggle for the inter
national commerce Of the world II it were possible
TO throw the immense trade of London LIVERPOOL and
New York into Havre, Cadiz, and Venice, you would
soon have occasional overtrading and rcvulsons but
Imagine those cities would thankfully receive the boom
with all its attendant evils
have made these general remarks OF, banking be-
cause Is impossible disguise the fact that this sub
treasury scheme is nothing than declaration of
war upon tne banking system. The cry now is, for
divorce OF the government from banks Such divorce
cannot take place without mischief To put down the
banks Is impossible, unless some scheme is devised 10
ruin them all That being the case. we are hound 10
act IN manner which will best secure the interests aud
harmony Of all. The sub-treasury scheme will No,
answer the purposefrst because il would as has been
concluslvely shown, make specie merchantable com
modify by giving premium, and thus forever prevent
the resumption Of specie payments or keep the banks in
continued insecurity If they should again pay spe
Gle Secondly, because believe the sub treasury sys-
TEN would produce much greater fluctuations in the
currency than the bank depos,e system So far as the
deposltes OF the General Government operate in pro-
ducing huctuatIons must arise from the stimulus given
to the banks to expand the currency What there to
correct this tendency Evidently. the great check
which Is the only true and safe regulator Of the banking
system, the unfavorable influence on the exchanges
through the operations Of deprecated currency This
produces demand for specie, and that demand
The banks OF an overissue, aud Of the necessity Of
talment. Hence you cannot infer that the expansion
VIII always be IN proportion to the magnitude OF the de-
postes' because the moment the banks oyerssuc tho
unavorable exchange will produce demand for specie
ana taat will Immediately correct the evil BY forcing